An Investor Is Considering a Project That Will Generate $800

question 54

Multiple Choice

An investor is considering a project that will generate $800 000 per year for four years. In addition to up-front costs, at the completion of the project at the end of the fifth year there will be shut-down costs of $500 000. If the cost of capital is 5%, based on the MIRR, at what up-front costs does this project cease to be worthwhile?

• A)$2.84 million
• B)$2.44 million
• C)$2.32 million
• D)$2.58 million

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Definitions:

Proximal Goals

Short-term goals that are set as steps towards a longer-term goal, making it easier to track progress and maintain motivation.

Demands Upon Themselves

The expectations or pressures individuals put on themselves, either to achieve certain goals or adhere to specific standards.

Capacity For Change

The active phase of self-regulation; willpower.

Self-Regulation

The process by which an individual controls their behavior, emotions, and thoughts towards achieving long-term goals.