A Company Facing an Interest Rate of 8% Must Choose

question 41

Multiple Choice

A company facing an interest rate of 8% must choose among projects offering the following four-year cash flows.If the company is employing the net present value criterion,which project should they choose?

• A)$25,000 in year 1;$15,000 in year 2;$10,000 in year 3;and $5,000 in year 4
• B)$5,000 in year 1;$5,000 in year 2;$20,000 in year 3;and $30,000 in year 4
• C)$15,000 in year 1;$15,000 in year 2;$15,000 in year 3;and $15,000 in year 4
• D)$5,000 in year 1;$5,000 in year 2;$25,000 in year 3;and $25,000 in year 4

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Definitions:

Retention Rate

The percentage of individuals or items that remain in a condition, process, or system over a given period compared to the number at the start.

University

An educational institution designed for instruction, examination, or both, of students in many branches of advanced learning.

Type I Error

The statistical error of rejecting a true null hypothesis or finding a difference when there is none, often referred to as a "false positive".

Weight Loss

A reduction in body weight, resulting from either voluntary (diet, exercise) or involuntary (illness) circumstances.