A Project Is Expected to Produce Cash Flows of $12,800,$15,900,and

question 70

Multiple Choice

A project is expected to produce cash flows of $12,800,$15,900,and $18,000 over the next 3 years,respectively.After 3 years,the project will be discontinued.What is this project worth today at a discount rate of 12.5 percent?

• A)$35,201.76
• B)$34,435.74
• C)$36,582.72
• D)$36,808.17
• E)$35,758.00

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Definitions:

Pareto Optimal

A state of allocation of resources in which it is impossible to make any individual better off without making at least one individual worse off.

Reallocation

The process of distributing or reallocating resources, tasks, or investments in a different manner with the aim to improve efficiency, returns, or outcomes.

Utility Increase

A rise in the level of satisfaction or benefit that a consumer derives from the consumption of goods or services.

Contract Curve

In economics, it represents the set of optimal distributions of goods or resources between parties that maximizes their utility in an exchange.