An All-Equity Firm Is Analyzing a Potential Project Which Will

question 171

Multiple Choice

An all-equity firm is analyzing a potential project which will require an initial,after-tax cash outlay of $50,000 and after-tax cash inflows of $6,000 per year for 10 years.In addition,this project will have an after-tax salvage value of $10,000 at the end of Year 10.If the risk-free rate is 6 percent,the return on an average stock is 10 percent,and the beta of this project is 1.50,then what is the project's NPV?

• A) $13,210
• B) $4,905
• C) $7,121
• D) −$6,158
• E) −$12,879

---

Definitions:

Linguistic Determinism

The concept that language determines or significantly influences thought patterns and perceptions of the world.

Language Acquisition

The process by which humans gain the ability to perceive and comprehend language, as well as to produce and use words and sentences to communicate.

Insight Theory

A psychological theory suggesting that problem-solving can sometimes happen suddenly through understanding the relationships between various parts of a problem rather than through trial and error.

Language On Thinking

The influence of language on cognitive processes and the way individuals conceptualize the world.