Oriental Company Has Gathered the Following Data on a Proposed

question 20

Multiple Choice

Oriental Company has gathered the following data on a proposed investment project:


The company uses straight-line depreciation on all equipment. (Ignore income taxes in this problem.)
-What would be the net present value of this investment?

• A) ($14,350).
• B) $77,200.
• C) $107,250.
• D) $200,000.

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Definitions:

Profits

The surplus remaining after total costs are deducted from total revenue, and an indicator of the financial health and success of a business.

Hydraulic Fracturing

A technique used in the oil and gas industry to increase extraction rates by injecting fluid into subterranean rocks to create fractures.

Fracking

A process of injecting liquid at high pressure into subterranean rocks, boreholes, etc., to force open existing fissures and extract oil or gas.

Natural Gas

A fossil fuel used primarily for heating, cooking, and electricity generation, consisting mainly of methane and other hydrocarbons.