Ajax Corporation Is Planning a 10 Year Project That Will

question 18

Multiple Choice

Ajax Corporation is planning a 10 year project that will have an initial cost of $500,000.During the first 2 years, there will be cash outflows of $40,000.Years 3-6 will see cash inflows of $120,000.Years 7-10 will see cash inflows of $200,000.If the company's required rate of return is 9%, determine the NPV of the project.

• A)$143,200
• B)$225,650
• C)$375,800
• D)$500,000

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Definitions:

Expected Return

The anticipated gain or loss that an investor predicts from an investment over a period, based on historical averages or estimated models.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange-traded funds (ETFs).

Portfolio's Beta

A measure of the volatility, or systematic risk, of a portfolio in comparison to the market as a whole.