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

question 24

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.
-The expected net present value of Project A if the outcomes are equally probable and the project has five-year life is ________. (See Table 12.1)

• A) -$1,045
• B) $17,910
• C) $36,865
• D) $93,730

---

Definitions:

Analysis And Planning

The systematic process of examining an organization's current state to develop strategic plans for future actions.

Transfers

The process of moving employees from one position, location, or job to another within the same organization.

Promotions

The advancement of an employee to a higher-ranked position with greater responsibility, usually accompanied by an increase in salary.