What Is the Maximum That Should Be Invested in a Project

question 65

Multiple Choice

What is the maximum that should be invested in a project at time zero if the inflows are estimated at $40,000 annually for three years, and the cost of capital is 9 percent?

• A)$101,251.79
• B)$109,200.00
• C)$117,871.97
• D)$130,800.00

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Definitions:

Expense Incurred

A cost that has been realized during the performance of business activities, pending payment or already paid.

Revenue Earned

Income received by a company from its business activities, such as sales of products or services.

Mortgage Payable

A liability account on the balance sheet representing the amount owed by a company or individual for the property's mortgage.

Asset

Resources owned or controlled by a business that are expected to provide future economic benefits, including tangible and intangible items.