You Have Been Asked to Analyze a Capital Investment Proposal

question 23

Multiple Choice

You have been asked to analyze a capital investment proposal. The project's cost is $2,775,000. Cash inflows are projected to be $925,000 in Year 1; $1,000,000 in Year 2; $1,000,000 in Year 3; $1,000,000 in Year 4; and $1,225,000 in Year 5. Assume that your firm discounts capital projects at 15.5%. What is the project's NPV?

• A) $101,247
• B) $285,106
• C) $473,904
• D) $582,380

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Definitions:

Determined

Having a firm decision or being resolved in the pursuit of a goal, not wavering in determination.

Independent Variable

The variable in an experiment that is manipulated or changed by the researcher to observe its effects.

Flossing Frequency

The recommended regularity of cleaning between teeth with dental floss to prevent gum disease and dental decay.

Gum Disease

A set of inflammatory conditions affecting the tissues surrounding the teeth, which can lead to redness, swelling, and in severe cases, tooth loss; also known as periodontal disease.