What Is the Net Present Value of a Project That

question 94

Multiple Choice

What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 12.5%.

• A)$-218.68
• B)$-124.46
• C)$-76.10
• D)$549.65
• E)$671.02

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Definitions:

Marginal Revenue Product

Additional income derived from the employment of an extra production factor.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Marginal Revenue Product

The additional income generated from using one more unit of a resource or factor of production.

Marginal Product

The additional output that results from using one more unit of a factor, keeping other factors constant.