A Project Costs $91,000 Today and Is Expected to Generate

question 107

Multiple Choice

A project costs $91,000 today and is expected to generate cash flows of $11,000 per year for the next 20 years. The firm has a cost of capital of 8 percent. Should this project be accepted, and why?

• A) Yes, the project should be accepted since it has a NPV = $15,391.23.
• B) Yes, the project should be accepted since it has a NPV = $13,610.89.
• C) Yes, the project should be accepted since it has a NPV = $16,999.62.
• D) None of the options are correct.

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Definitions:

LED Display

An electronic display technology that uses light-emitting diodes to visually convey information, such as numeric readouts or alphanumeric text.

Rung(s)

Logical levels in a ladder diagram, representing a series of connected electrical elements in control programming, like those in a PLC (Programmable Logic Controller).