Use the Following Information to Answer the Question(s)below

question 57

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental is considering adding a trucking division to expand the coverage of its existing rail lines.The trucking division will cost $1,000,000 and is expected to generate free cash flows of $100,000 for each of the next five years.Taggart Transcontinental forecasts that future free cash flows after year 5 will grow at 2% per year,forever.Taggart Transcontinental's cost of capital is 10%.
-The NPV for the trucking division is closest to:

• A)$170,750.
• B)$200,000.
• C)$212,550.
• D)$250,000.
• E)$312,500.

---

Definitions:

Foraging Societies

Those in which people live by searching for wild plants and hunting wild animals. Such societies predominated until about 10,000 years ago. Inequality, the division of labor, productivity, and settlement size are very low in such societies.

Service Sector

A segment of the economy that involves providing services rather than producing goods, including industries like banking, healthcare, and education.

Class Inequality

The disparity in access to resources, opportunities, and rights among different social classes.

Gender Inequality

The social process by which people are treated differently and disadvantageously, under similar circumstances, on the basis of gender.