CapiCal Enterprises Is Transforming Some of Their Fossil Fuel Based

question 42

Multiple Choice

CapiCal Enterprises is transforming some of their fossil fuel based processes to those being driven by wind turbines. Based on extensive meteorological data, the following savings have been projected for the next five years: $850,000, $680,000, $995,000, $778,000 and $900,000. If interest rates are at 7% compounded annually and the company is willing to invest all the savings in the green technology, what would it be willing to pay today for the reengineering?

• A) $2,657,332
• B) $5,506,501
• C) $3,435,778
• D) $14,477,104
• E) $8,989,341

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Definitions:

Trust Fund

A fund comprised of a variety of assets intended to provide benefits to an individual or organization, managed by a trustee.

Compounded Annually

Refers to the process of calculating interest on an investment or loan once per year, adding it to the principal amount.

Perpetuity

An annuity that pays a fixed amount of money indefinitely.

Monthly Benefits

Regular payments received by an individual, typically from a pension or retirement fund, on a monthly basis.