A Project Requires an Additional Commitment of $100,000 in Net

question 81

Multiple Choice

A project requires an additional commitment of $100,000 in net working capital in each of years 1 to 4.These extra investments can be recovered in year 5 when the project comes to an end.What is the effect on NPV?

• A) NPV is reduced by $100,000.
• B) NPV is reduced by the present value of $100,000 discounted at the firm's cost of capital for 4 years.
• C) NPV is reduced by the present value of $100,000 discounted at the firm's cost of capital for each of years 1 to 4 minus the discounted value of the $400,000 that is recovered in year 5.
• D) No opportunity cost is involved.

---

Definitions:

Checked

In the context of exceptions in Java, it refers to exceptions that are checked at compile-time, requiring explicit handling in the code.

Interface

A programming construct that specifies a set of methods a class must implement without providing the method implementations.

WindowAdapter

An abstract adapter class for receiving window events, allowing its subclasses to override only the methods they are interested in.