A Project Is Expected to Create Operating Cash Flows of $22,500

question 63

Multiple Choice

A project is expected to create operating cash flows of $22,500 a year for three years. The initial cost of the fixed assets is $50,000. These assets will be worthless at the end of the project. An additional $3,000 of net working capital will be required throughout the life of the project. What is the project's net present value if the required rate of return is 10%?

• A) $2,208.11
• B) $2,954.17
• C) $4,306.09
• D) $5,208.11
• E) $5,954.17

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Definitions:

Oedipal

Relating to the Oedipus complex, a theory in psychoanalytic psychology that describes a child's feelings of desire for the opposite-sex parent and jealousy toward the same-sex parent.

Electra

A psychoanalytic theory originally suggested by Carl Jung, referring to a girl's psychosexual competition with her mother for possession of her father.

Sigmund Freud

A neurologist from Austria who established psychoanalysis, a technique for addressing mental disorders via conversation between a psychoanalyst and their patient.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology, emphasizing the importance of the individual psyche and the personal quest for wholeness.