A Project Will Produce Cash Inflows of $3,200 a Year

question 82

Multiple Choice

A project will produce cash inflows of $3,200 a year for 4 years with a final cash inflow of $5,700 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

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Definitions:

Marginal Cost

The increase in total production cost that comes from making or producing one extra item.

Production Function

Refers to the relationship between input resources (like labor, land, and capital) and the output produced by these resources.

Marginal Product Of Labor

The additional output a firm gains from employing one more unit of labor, holding all other inputs constant.

Demand For Labor

The total amount of workers that employers want to hire at a given wage rate and time period.