Table 12.1 A Corporation Is Assessing the Risk of Two Capital Budgeting

question 64

Multiple Choice

Table 12.1
A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firm's cost of capital is 10 percent.
-If the projects have five-year lives, the range of the net present value for Project B is approximately ________. (See Table 12.1)

• A) $80,563
• B) $201,000
• C) $255,444
• D) $303,263

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Definitions:

Future Generations

Refers to the people who will live in the future, highlighting the importance of sustainable practices to not compromise their needs.

Sustainability

The use of resources to enable society to satisfy current needs, without compromising the ability of future generations to meet their needs.

Resources

Assets, materials, or other items of value that are available to an individual or organization to achieve goals or carry out activities.

Zero Emissions

Occur when carbon or polluting emissions are reduced and/or offset so that there is no net addition of emissions that are harmful to the environment or climate, usually by the emitting source.