You Calculate the Following Estimates of Project Cash Flows

question 52

Multiple Choice

You calculate the following estimates of project cash flows:
The revenues and costs occur in perpetuity,as opposed to the initial investment.The cost of capital is 8%.What does a sensitivity analysis of NPV (without taxes) show? (Answers appear in order: [Pessimistic,Most Likely,Optimistic].)

• A)25.00,+232.50,+440.00
• B)-100.00,+500.00,+800.00
• C)-90.00,-55.00,-20.00
• D)-88.33,-50.00,-18.50

---

Definitions:

Liquidation Expenses

Costs incurred during the process of selling off assets or winding up a business, including legal fees, auctioneer fees, and other related expenses.

Cash Distribution

The payment of earnings or capital to shareholders, partners, or members from a corporation, partnership, or other entity, typically in the form of cash.

Noncash Assets

Assets that are not in the form of cash or cash equivalents, including physical property, intellectual property, and investments.

Remaining Cash

The amount of money that is available after all expenses and liabilities have been paid.