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:

De-emphasize

To make something less prominent or reduce its emphasis in comparison to other aspects.

Pros and Cons

A list or discussion of the advantages (pros) and disadvantages (cons) of a particular decision or course of action.

Positive Emphasis

Focusing on positive aspects or optimistic views in communication to influence perception or behavior.

Unethical

Acting in ways that go against moral principles, often causing harm or showing a lack of integrity.