Gamma Company Is Considering an Investment Proposal That Would Require

question 45

Multiple Choice

Gamma Company is considering an investment proposal that would require an initial outlay of $800,000, and would yield yearly cash flows of $200,000 for 9 years. The company uses a discount rate of 10%. What is the NPV of the investment? Present value of annuity of $1:

• A)$350,000
• B)$400,000
• C)$351,800
• D)$250,000

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Definitions:

Stock Of Wealth

Refers to the total value of all assets owned by an individual, a company, or a country at a given point in time, excluding liabilities.

Intermediate Goods

Products used in the production process to make other goods and services but not sold directly to consumers.

Manufacture

The process of converting raw materials into finished goods through the use of labor, machines, and chemical processes.

Gross Domestic Product

The total value of all goods and services produced within a country in a specific time period.