How Much Could NPV Be Affected by a Worst-Case Scenario

question 41

Multiple Choice

How much could NPV be affected by a worst-case scenario of 25% reduction from the $3 million in expected annual cash flows on a 5-year project with 10% cost of capital?

• A) $2,843,090
• B) $3,750,000
• C) $4,578,825
• D) $6,155,274

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Definitions:

Compliance

Compliance involves following and adhering to laws, regulations, standards, and ethical practices in one's personal actions or in the operations of a business or institution.

Activity-Based Measure

A performance metric or accounting method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

5C Model

A marketing model encompassing five essential elements: Company, Customers, Competitors, Collaborators, and Context.

Balanced Scorecard

A strategic planning and management system used to align business activities to the vision and strategy of the organization, tracking performance against strategic goals.