A Project You Are Considering Is Expected to Provide Benefits

question 67

Multiple Choice

A project you are considering is expected to provide benefits worth $225,000 in one year.If the risk-free rate of interest (r_f) is 8%,then the value of the benefits of this project today are closest to:

• A)$190,333
• B)$208,333
• C)$225,000
• D)$243,000

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Definitions:

Maturity Structure

The classification of a portfolio or entity's liabilities based on the time frame until those obligations mature or are due for payment.

Obligations

Duties carried by entities or individuals that arise from contractual agreements, law, or regulation requiring them to act in a certain manner.

Capital Structure

Refers to the mix of different types of debt and equity that a company uses to finance its overall operations and growth.

Productive Capacity

The maximum output or production level that can be achieved with the available inputs and resources without stressing the production system.