What Is the NPV for a Project If Its Cost

question 161

Multiple Choice

What is the NPV for a project if its cost of capital is 0 percent and its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,300,000 in year 4?

• A) $1,700,000
• B) $371,764
• C) $137,053
• D) $6,700,000

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Definitions:

Merchandising Companies

Businesses that purchase goods and resell them at a higher price without modifying the original products.

Managers

Individuals responsible for administering and controlling part or all of a company's operations.

Company's Goals

Objectives or targets that a company aims to achieve over a certain period of time.

Capital Expenditures Budget

A financial plan that allocates funds for the purchase and maintenance of long-term assets to enhance or expand the business operations.