A Firm Forecasts a Project's Net Cash Flows ($Millions)in Years

question 23

Multiple Choice

A firm forecasts a project's net cash flows ($millions) in years 1 thru 4 as $120,$130,$135,and $137,respectively.If the project ends at the end of the fourth year,what is the horizon value of the project? Assume that the company had a historical growth rate of 3% and has a discount rate of 10%.

• A)$0.00
• B)$1.37
• C)$1.96
• D)$4.87

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Definitions:

Jean Piaget

A Swiss psychologist renowned for his developmental stage theory that children progress through four critical stages of cognitive development.

Assimilation

A cognitive process in which individuals integrate new information with existing knowledge, or in a sociological context, the process by which individuals or groups adapt to the culture of another group.

New Experiences

Encounters or activities that are different from one's previous ones, contributing to learning or personal growth.

Mental Structures

The underlying psychological frameworks that shape how individuals perceive, think, and understand the world.