What Is the NPV of a Project That Costs $100,000

question 122

Multiple Choice

What is the NPV of a project that costs $100,000, provides $23,000 in cash flows annually for six years, requires a $5,000 increase in net working capital, and depreciates the asset at 15 percent declining balance over six years and sold at zero salvage value? The discount rate is 14 percent.The tax rate is 40 percent.

• A)-$23,460
• B)-$13,283
• C)$13,283
• D)$44,866

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Definitions:

Dense Irregular Connective Tissue

A type of connective tissue that has fibers that are not arranged in parallel patterns, providing strength and support in multiple directions.

Adipose Tissue

A type of connective tissue known for storing fat cells, providing insulation, and serving as an energy reserve.

Safety Inventory

Extra inventory held to protect against unpredictability in demand or supply, ensuring product availability.

Supply Uncertainty

The unpredictability associated with the availability of products or materials necessary for production.