A Given Project Requires a $25,000 Investment and Is Expected

question 14

Multiple Choice

A given project requires a $25,000 investment and is expected to generate end-of-period annual cash inflows as follows: $$\begin{array} { c c c c } \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \\\hline \$ 4,000 & \$ 15,000 & \$ 6,000 & \$ 25,000\end{array}$$ Assuming a discount rate of 10%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$$\begin{array} { c c c } i = 10 \% & i = 10 \% & i = 10 \% \\n = 1 & n = 2 & n = 3 \\\hline .9091 & .8264 & .7513\end{array}$$

• A)$6,217.50
• B)($4,459.80)
• C)($6,217.50)
• D)$8,275.00
• E)$0.00

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Definitions:

Unused Capacity

The portion of a production facility or resource that is available but not currently in use or producing outputs.

Job-Order Costing

An accounting method that tracks costs individually for each job, suitable for businesses that produce custom products or services.

Automated Bandsaw

A type of sawing machine equipped with a blade in the form of a continuous band and automated for efficient cutting operations.

Unused Capacity

Represents resources or facilities available but not currently being utilized to their full potential in the production process.