A Project Costs $91,000 Today and Is Expected to Generate

question 107

Multiple Choice

A project costs $91,000 today and is expected to generate cash flows of $11,000 per year for the next 20 years. The firm has a cost of capital of 8 percent. Should this project be accepted, and why?

• A) Yes, the project should be accepted since it has a NPV = $15,391.23.
• B) Yes, the project should be accepted since it has a NPV = $13,610.89.
• C) Yes, the project should be accepted since it has a NPV = $16,999.62.
• D) None of the options are correct.

---

Definitions:

Taste Bud

Specialized sensory structures located on the tongue and other parts of the mouth, responsible for detecting the five elements of taste perception: sweetness, sourness, bitterness, saltiness, and umami.

Place Theory

A theory in psychoacoustics suggesting that the perception of sound depends on where each component frequency produces vibrations along the basilar membrane of the inner ear.

Helmholtz

Refers to Hermann von Helmholtz, a German physicist and physician known for his contributions to the understanding of the conservation of energy and the physiology of vision and hearing.

Taste Buds

Sensory organs on the tongue and other parts of the mouth that are responsible for experiencing taste.