A Project Has the Following Cash Flows:CF 0 -10,000CF 1

question 106

Multiple Choice

A project has the following cash flows:CF 0 -10,000CF 1 $1,500CF 2 $4,400CF 3 $5,000CF 4 $3,800Assuming a required rate of return of 15%,would management accept this project?NPV @ r = 15% = $10,092 (rounded up) PV (Costs) = $10,000PI = $10,092 / $10,000 = 1.009

• A)1.01
• B)1.10
• C)1.20
• D)1.33

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Definitions:

Life Cycle

Describes the series of stages that an entity or product goes through from inception through growth, maturity, and eventual decline or termination.

Dissolution

The process of legally terminating and liquidating a company's existence.

Distributed Assets

Allocation of assets from an entity to its beneficiaries or creditors following dissolution or liquidation.

Limited Partnership

A business arrangement where at least one partner is responsible for the company's liabilities only up to the amount they have invested, while at least one other has unlimited liability.