A Project Will Produce After-Tax Operating Cash Inflows of $3,200

question 21

Multiple Choice

A project will produce after-tax operating cash inflows of $3,200 a year for 5 years.The after-tax salvage value of the project is expected to be $2,500 in year 5.The project's initial cost is $9,500.What is the net present value of this project if the required rate of return is 16 percent?

• A) -$311.02
• B) $2,168.02
• C) $4,650.11
• D) $9,188.98
• E) $21,168.02
• F) None of the above.

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Definitions:

Demand Curve

A graph plotting the quantity of a good that buyers wish to purchase at different price levels, typically sloping downwards from left to right.

Consumer Confidence

A measure of the overall consumer optimism about the state of an economy, reflected through spending and saving behaviors.

Housing Bubble

A temporary condition characterized by an unusual increase in housing prices fueled by demand, speculation, and exuberant spending to the levels that income levels do not support.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, usually downward sloping to the right indicating inverse relationship between price and quantity demanded.