Chester National Bank Is Considering Adding a New Branch Bank

question 109

Multiple Choice

Chester National Bank is considering adding a new branch bank.It knows that it will cost $2.5 million to build the branch and it believes that it will generate $214,526 per year for the next 25 years.Chester National Bank requires a return of 10% on all new projects it undertakes.What is this project's net present value? (Round to the nearest $100)

• A)-$552,700
• B)-$3,052,700
• C)$1,947,300
• D)$2,863,200
• E)$5,363,200

---

Definitions:

Normal Balance

The side (debit or credit) of an account that is usual or expected to increase the balance of that account.

Liability

Financial obligations or debts that a company owes to others, which must be settled through the transfer of assets or provision of services.

Asset

An economic resource that can be owned or controlled to produce value and that is held by a company to produce positive economic value.

Equity

The worth of an owner's stake in a property or business once all debts and other financial obligations have been subtracted.