Edmondson Electric Systems Is Considering a Project That Has the Following

question 122

Multiple Choice

Edmondson Electric Systems is considering a project that has the following cash flow and WACC data.What is the project's NPV? $\begin{array}{cccc} \text { WACC } &10.00 \% \\ \text { Year: } & 0 & 1 & 2 & 3 \\\hline \text {Cash flows: } & -\$ 1,000 & \$ 500 & \$ 500 & \$ 500\end{array}$

• A)$243.43
• B)$255.60
• C)$268.38
• D)$281.80

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Definitions:

Output

The cumulative quantity of products or services generated by a business, sector, or economic system over a given timeframe.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain it.

Demand Schedule

A table or graph showing the quantity of a product that consumers are willing and able to purchase at various prices during a specified period.

Marginal Cost

The supplementary cost resulting from manufacturing an extra unit of a good or service.