MrWills Invested in a Business That Will Generate $75,000 Annual

question 75

Multiple Choice

Mr.Wills invested in a business that will generate $75,000 annual after-tax cash flow in years 0 and 1 and $90,000 annual after-tax cash flow in years 2 and 3.Compute the NPV of these cash flows at a 10% discount rate using Appendix A.

• A)$259,185
• B)$277,348
• C)$290,310
• D)None of the above

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Definitions:

Sales Discount

A reduction in the price of goods or services offered to customers, typically to prompt early payment or bulk purchases.

Contra Revenue Account

An account used to record reductions in gross revenue, such as discounts, returns, and allowances.

Operating Expense

Refers to the costs associated with the day-to-day functions of a business, excluding costs related to production.