Use the Table for the Question(s)below

question 83

Multiple Choice

Use the table for the question(s) below.
Consider a project with the following cash flows:

-Given the cash flows in the table above,the point at which the NPV profile crosses the vertical axis is:

• A)$6000
• B)-$867
• C)22.0%
• D)15.0%
• E)$0

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Definitions:

Watered Stock

Shares issued by a company at a value much greater than its asset worth, inflating its apparent value without actual backing.

Fair Market Value

An estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Business Judgment Rule

A legal principle protecting corporate directors and officers from liability for decisions made in good faith and in the best interest of the company.

Derivative Action

A lawsuit brought by a corporation’s shareholder on behalf of the corporation against a third party, often an insider of the corporation.