A Proposed Ten-Year Project Has the First Year Sales Revenue

question 112

Multiple Choice

A proposed ten-year project has the first year sales revenue and cost projected at $300,000 and $100,000,respectively.Sales revenue is expected to grow at 3 percent per year,while the costs will grow at 5 percent per year.The firm's marginal tax rate is 35 percent and required return is 9 percent.What is the present value of the after-tax operating cash flows generated by the project?

• A) $898,126
• B) $914,932
• C) $1,625,000
• D) $1,641,250

---

Definitions:

Thickened

The condition or process of becoming denser or more compact in structure.

Exaggerated

Describes something that is overstated or made to seem more important or serious than it actually is.

Gambler's Fallacy

The incorrect idea that an increased frequency of an event in a certain period means it will happen less often later on, or the reverse.

Provincial Lottery

A gambling game managed at the provincial level where players buy tickets for a chance to win prizes based on drawn numbers.