What Is the Net Present Value of a Project with the Following

question 34

Multiple Choice

What is the net present value of a project with the following cash flows if the discount rate is 14 percent?

• A) $742.50
• B) $801.68
• C) $823.92
• D) $899.46
• E) $901.15

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Definitions:

Cash-Equivalent Price

The cash-equivalent price is the price of a service or asset if paid for in cash at the same time, as opposed to being financed.

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Consideration

In legal and accounting terms, it refers to the value, either monetary or a promise of action, that is exchanged between parties in a contract.

Residual Value

the estimated value that an asset will have at the end of its useful life.