A Firm Is Evaluating an Investment Proposal Which Has an Initial

question 140

Multiple Choice

A firm is evaluating an investment proposal which has an initial investment of $5,000 and cash flows presently valued at $4,000. The net present value of the investment is ________.

• A) -$1,000
• B) $9,000
• C) $4,000
• D) -$4,000

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Definitions:

Percent Equivalent

A value expressed as a percentage that represents a portion of a whole.

Repeating Decimal

A decimal number in which a sequence of digits repeats indefinitely.

Decimal Notation

A numerical representation system that uses the base 10 and includes a decimal point to separate the integer part from the fractional part.

Percent Equivalent

A value representing a part of a whole as a fraction of 100.