Table 12.1 A Corporation Is Assessing the Risk of Two Capital Budgeting

question 89

Multiple Choice

Table 12.1
A corporation is assessing the risk of two capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firm's cost of capital is 10 percent.
-If the projects have five-year lives, the range of the net present value for Project B is approximately ________. (See Table 12.1)

• A) $80,560
• B) $201,000
• C) $255,410
• D) $303,280

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Definitions:

Atlantoaxial

Pertaining to the joint between the atlas (C1 vertebra) and the axis (C2 vertebra) that allows for the rotation of the head.

Cartilaginous Joints

Joints where the bones are attached by cartilage, allowing for more movement than fibrous joints but less movement than synovial joints.

Hyaline Cartilage

A translucent, bluish-white type of cartilage present in the joints, respiratory tract, and other sites, providing a smooth surface for joint movement as well as support and flexibility.

Fibrocartilage

A type of cartilage with a dense interwoven network of collagen fibers, providing strong support and resisting pressure.