A Project Will Produce an Operating Cash Flow of $7,300

question 23

Multiple Choice

A project will produce an operating cash flow of $7,300 a year for three years. The initial cash investment in the project will be $11,600. The net after-tax salvage value is estimated at $3,500 and will be received during the last year of the project's life. What is the net present value of the project if the required rate of return is 11%?

• A) $8,798.29
• B) $9,896.87
• C) $10,072.72
• D) $13,353.41
• E) $20,398.29

Recognize the importance of continuous evaluation of performance metrics.

Understand the concepts and components of a balanced scorecard.

Identify the role and construction of performance metrics and targets within organizational strategy.

Differentiate between leading and lagging indicators.

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Definitions:

Cost of Equity

The cost of equity refers to the return a company must offer investors to compensate for the risk they undertake by investing in the company's equity.

Dividend Yield

A finance ratio illustrating the yearly dividends paid by a company in comparison to its stock price.

Capital Gains Yield

The dividend growth rate or the rate at which the value of an investment grows.

Cost of Capital

The rate of return that a company must pay to its creditors and shareholders for using their capital.