At Current Prices and a 13% Cost of Capital,a Project's

question 117

Multiple Choice

At current prices and a 13% cost of capital,a project's NPV is $100,000.By what minimum amount must the initial cost of the project decrease (revenues will be unchanged) before you would wait 2 years to invest?

• A) $21,685
• B) $26,000
• C) $27,690
• D) $29,380

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Definitions:

Income Statement

A financial document that shows a company's revenues, expenses, and net profit or loss over a specific period of time.

Balance Sheet

An official record presenting the total assets, liabilities, and net worth of shareholders of a firm at a fixed point in time.

Adjusting Journal Entry

Entries made in accounting records to update the balances of accounts before producing financial statements, ensuring they adhere to the accrual basis of accounting.

Salaries

Compensation given to employees for their labor or services, typically paid on a monthly or biweekly basis.