A Project Is Expected to Create Operating Cash Flows of $37,600

question 81

Multiple Choice

A project is expected to create operating cash flows of $37,600 a year for 3 years.The initial cost of the fixed assets is $98,000.These assets will be worthless at the end of the project.Also,$3,200 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 14 percent?

• A)$11,746.73
• B)$12,011.98
• C)$10,927.87
• D)−$11,746.73
• E)−$12,011.98

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Definitions:

Current Path

The path or route that electric current follows through a circuit or an electrical device.

Series-Parallel

A configuration in electrical circuits where components are arranged in a combination of series and parallel connections to manage voltage and current distribution.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment by comparing the present value of its cash inflows to the present value of its cash outflows.