Parks Company Is Considering an Investment Proposal in Which a Working

question 36

Multiple Choice

Parks Company is considering an investment proposal in which a working capital investment of $10,000 would be required.The investment would provide cash inflows of $2,000 per year for six years.The working capital would be released for use elsewhere when the project is completed.If the company's discount rate is 10%,the investment's net present value is:

• A) ($1,290).
• B) $1,290.
• C) $2,000.
• D) $4,350.

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Definitions:

Franchises

A type of business model that allows individuals or entities to operate their own branches of an established company with its branding, knowledge, and processes.

Product-distribution Franchising

A specific type of franchising agreement where the franchisee sells the franchisor's products directly to the retail customer.

Fast-food Restaurants

Eating establishments that offer quick service, convenience, and food typically prepared in a standardized manner.

Lodging Establishments

Businesses that provide temporary accommodation services, such as hotels, motels, inns, and bed-and-breakfasts.