A Project Anticipates Net Cash Flows of $10,000 at the End

question 24

Multiple Choice

A project anticipates net cash flows of $10,000 at the end of year 1,with such amount growing at the expected 5% rate of inflation over the subsequent 4 years.Calculate the real present value of this 5-year cash stream if the firm employs a nominal discount rate of 15%.

• A) $33,522
• B) $38,377
• C) $43,294
• D) $55,000

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Definitions:

Compliance

The act of conforming to, following, or acting in accordance with requests, standards, or rules.

Mere Compliance

Following orders, rules, or requests with minimal effort or enthusiasm, often without internal agreement or dedication.

Motivated

Having the desire or willingness to do something, especially in the context of achieving goals or fulfilling tasks.

Conform

To align one's behavior or beliefs to match those of a group, society, or set of standards.