What Is the Net Present Value of a Project That

question 75

Multiple Choice

What is the net present value of a project that has an initial cash outflow of $7,670 and cash inflows of $1,280 in Year 1,$6,980 in Year 3,and $2,750 in Year 4? The discount rate is 12.5 percent.

• A)$86.87
• B)$270.16
• C)$68.20
• D)$249.65
• E)$371.02

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Definitions:

Accounting Equation

The fundamental principle of accounting that states Assets = Liabilities + Equity, ensuring that a company's financial statements are balanced.

Purchase Supplies

The act of acquiring materials and consumable items required for the production process or office use.

Assets

Resources owned by a company that are expected to provide future economic benefits.

Investing Activity

Financial activities related to acquiring or disposing of non-current assets, such as property, plant, and equipment, which are recorded on a company's cash flow statement.