A Project Will Produce Cash Inflows of $1,750 a Year

question 51

Multiple Choice

A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five,the project will be closed and as a result should produce a cash inflow of $8,500. What is the net present value of this project if the required rate of return is 13.75%?

• A) -$5,474.76
• B) -$1,011.40
• C) -$935.56
• D) $1,011.40
• E) $5,474.76

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Definitions:

Manufacturing Cycle Efficiency

A metric that measures the efficiency of a manufacturing process by dividing the value-added production time by the total cycle time.

Production Data

Information related to the quantity, quality, cost, and efficiency of the production process in a manufacturing company.

Prevention Cost

Expenses incurred to avoid defects in products or services, including costs related to quality training and product design improvements.

Quality Cost Report

A report detailing the costs associated with avoiding poor quality, identifying defects, and repairing defective products, categorized into prevention, appraisal, and failure costs.