Ms Card Bought an Investment That Will Generate the Following

question 81

Multiple Choice

Ms. Card bought an investment that will generate the following cash flows over a three-year period. If Ms. Card's marginal tax rate over the three year period is 40% and she uses a 6% discount rate, compute the NPV of the transaction.

• A) $94,129
• B) $84,964
• C) $62,373
• D) None of the above

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Definitions:

Price

The cost expected, compelled, or remitted in reimbursement for something.

Marginal Revenue

The additional earnings received from the sale of an extra unit of a good or service.

Competitive Firm

A business operating in a market where it has little to no influence on the prices of its products or services due to the presence of many similar providers.

Average Revenue

Average revenue is the revenue earned per unit of output sold, calculated by dividing total revenue by the total number of units sold.