What Is the Net Present Value of the Following Sequence

question 38

Multiple Choice

What is the net present value of the following sequence of annual cash flows at a discount rate of 16% APR?

• A)$136,741.97
• B)$122,948.87
• C)$158,620.69
• D)$139,418.23

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Definitions:

Market Price

The current price at which a good or service can be bought or sold in a particular market, determined by supply and demand.

Total Revenue

The total income received by a company from its sales of goods or services, without any deductions.

Cost Curves

Graphical representations showing how the cost to produce a given level of output changes with the amount of output.

Price-Taker Industry

An industry in which individual companies have no control over the market price of their product; they must "take" the market price as given.