Tangshan Mining Company, with a Cost of Capital of 10

question 37

Multiple Choice

Tangshan Mining Company, with a cost of capital of 10 percent, is considering investing in project A, with an initial investment of $1,000,000. Project A is expected to provide equal cash inflows over its 15 year useful life. Based on this information, the breakeven cash inflow for the project is

• A) $1,000,000.
• B) $131,474.
• C) $100,000.
• D) none of the above.

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Definitions:

Personal Liability

The legal responsibility of an individual to bear the burden of debt or obligation from his/her actions, separate from the liability of a business entity or corporation.

Control of Business

Refers to the authority or power to manage the operations, decisions, and policies of a company or organization.

Split Profits

The distribution of earnings or gains between partners, stakeholders, or businesses according to agreed-upon percentages or criteria.

Sole Proprietorship

A business owned and operated by a single individual where there is no legal distinction between the owner and the business entity.