You Are Considering a Project That Has Been Assigned a Discount

question 55

Multiple Choice

You are considering a project that has been assigned a discount rate of 14 percent.If you start the project today,you will incur an initial cost of $8,500 and will receive cash inflows of $5,550 a year for two years.If you wait one year to start the project,the initial cost will rise to $9,200 and the cash flows will increase to $5,800 a year for two years.What is the value of the option to wait?

• A)-$331.40
• B)-$194.46
• C)$228.51
• D)$230.49
• E)$334.68

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Definitions:

Indigenous Canadians

The First Nations, Inuit, and Métis peoples of Canada, each with their own distinct heritage, language, cultural practices, and political systems.

Life Expectancy

The average period that a person may expect to live, which can vary greatly depending on factors such as geographical location, genetics, lifestyle, and access to healthcare.

Non-Indigenous

Referring to individuals or groups that are not native or original to a certain region, often used in the context of people living in lands historically inhabited by indigenous populations.

Rehabilitation Centre

A facility designed to aid in the recovery and therapy of individuals who have suffered from illnesses, injuries, or addictions, helping them regain skills or develop new ones for daily living.