Which of the Following Statements Is True for a Project

question 6

Multiple Choice

Which of the following statements is true for a project with $20,000 initial cost, cash inflows of $5,800 per year for six years, and a discount rate of 15 percent?

• A)its payback period is roughly 3 1/2 years.
• B)its NPV is $2,194.
• C)its IRR is 1.85 percent.
• D)its profitability index is 0.109.

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Definitions:

Selling Price

The amount a buyer pays to acquire a product or service, potentially including discounts, allowances, and added taxes.

Fixed Expense

Costs that do not change with the level of production or business activity, such as rent or salaries.

Break-even

The juncture where the total expenses match the total income, leading to a situation where there is no profit or loss.

Selling Price

The amount of money charged for a product or service, determined by cost, market demand, and competition.