Patterson Co $\begin{array}{lcccc}r & 10.00 \% \\\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & -\$ 950 & \$ 500 & \$ 400 & \$ 300\end{array}$

question 6

Multiple Choice

Patterson Co. is considering a project that has the following cash flow and cost of capital (r) data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected. $\begin{array}{lcccc}r & 10.00 \% \\\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & -\$ 950 & \$ 500 & \$ 400 & \$ 300\end{array}$

• A) $54.62
• B) $57.49
• C) $60.52
• D) $63.54
• E) $66.72

---

Definitions:

TARP Bailout

The Troubled Asset Relief Program, a U.S. government program created in 2008 to purchase toxic assets and inject capital into banks to stabilize the financial system.

Deposit Multiplier

The ratio of the amount of deposits created by banks to the amount of new reserves.

Reserve Ratio

The fraction of depositors' balances banks must have on hand as cash, a regulatory requirement designed to ensure banks' liquidity and stability.

Inflation

The pace at which prices for goods and services broadly ascend, causing the value of money to decrease.