Project Delta Has the Following Cash Flows:CF 0 -$1,000,000CF 1

question 105

Multiple Choice

Project Delta has the following cash flows:CF 0 -$1,000,000CF 1 $100,000CF 2 $500,000CF 3 $500,000CF 4 $30,000If this project has a required rate of return of 22%,will management accept or reject the project?NPV @ r =22% = -$293,206 (rounded up)

• A)Management would reject the project because the project has a NPV of $234,398.
• B)Management would reject the project because the project has a NPV of -$293,206.
• C)Management would reject the project because the project has a NPV of $293,206.
• D)Management would reject the project because the project has a NPV of -$649,550.

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Definitions:

Cash Dividends

Payments made by a company to its shareholders from its profits or reserves.

Date of Record

The date of record is a cut-off date set by a corporation to determine which shareholders are eligible to receive a dividend or distribution.

Liability

An obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer of assets, provision of services, or other yielding of economic benefits in the future.

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a certificate or instrument.