A Company Is Considering an Iron Ore Extraction Project That

question 82

Multiple Choice

A company is considering an iron ore extraction project that requires an initial investment of $512,000 and will yield annual cash inflows of $156,000 for four years. The company's discount rate is 9%. What is the NPV of the project? Present value of an ordinary annuity of $1:
$$\begin{array} { | c | r | r | r | } \hline & { 8 \% } & { 9 \% } & { 10 \% } \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 1.783 & 1.759 & 1.736 \\\hline 3 & 2.577 & 2.531 & 2.487 \\\hline 4 & 3.312 & 3.24 & 3.17 \\\hline 5 & 3.993 & 3.89 & 3.791 \\\hline 6 & 4.623 & 4.486 & 4.355 \\\hline 7 & 5.206 & 5.033 & 4.868 \\\hline 8 & 5.747 & 5.535 & 5.335 \\\hline 9 & 6.247 & 5.995 & 5.759 \\\hline 10 & 6.71 & 6.418 & 6.145 \\\hline\end{array}$$

• A) $6560
• B) $(102,400)
• C) $102,400
• D) $(6560)

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Definitions:

Refreezing

The stage in Lewin's model of change where new behaviors or norms are consolidated into the organization or individual's way of life.

Technological Changes

Developments or advancements in technology that alter the way tasks are performed or how processes are conducted.

Environmental Changes

Alterations in the external surroundings, including natural ecosystems and human-made environments, that can impact living organisms.

Lewin's Change Model

A framework describing organizational change through three stages: unfreezing, changing, and refreezing, to help understand and manage change processes.