Suppose a Project Requires an Initial Investment of $10,000 and It

question 21

Multiple Choice

Suppose a project requires an initial investment of $10,000 and it will yield $1,500 for 8 years.The discount rate is 10%.What is the NPV of the project and should we accept or reject it?

• A) −$1,997.61; reject
• B) $1,997.61; accept
• C) −$2,000; reject
• D) $2,000; accept

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Definitions:

Lamina

A thin layer, plate, or scale of organic material, such as the lamina of a vertebrate's bone or the lamina propria in mucous membranes.

Xiphoid Process

A small cartilaginous extension of the lower part of the sternum which is usually ossified in the adult human.

Costal Cartilage

The bars of hyaline cartilage that connect the ends of the ribs to the sternum, contributing to the elasticity and expansion capacity of the rib cage.

Manubrium

The broad, upper part of the sternum (breastbone) with which the clavicles (collarbones) and the first ribs articulate.