Molly Is Considering a Project with Cash Inflows of $918,$867,$528,and

question 12

Multiple Choice

Molly is considering a project with cash inflows of $918,$867,$528,and $310 over the next four years,respectively.The relevant discount rate is 10 percent.What is the net present value of this project if it the start-up cost is $2,100?

• A)$59.50
• B)$131.83
• C)$148.08
• D)$210.45
• E)$229.50

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Definitions:

Government Budget Deficit

The financial situation that occurs when a government spends more money than it receives in revenue over a given fiscal period.

Interest Rate

The number of dollars earned per dollar invested per period.

Real Rate

The rate of interest an investor expects to receive after allowing for inflation, reflecting the true cost of borrowing and the true yield on investments.

Nominal Rate

The rate of interest quoted on loans and investments, without taking into account the compounding of interest within a year or the effects of inflation.