A Company Is Considering an Iron Ore Extraction Project Which

question 96

Multiple Choice

A company is considering an iron ore extraction project which requires an initial investment of $500,000 and will yield annual cash flows of $150,000 for 4 years. The company's hurdle rate is 9%. What is the NPV of the project? $$\begin{array} { | l | l | l | l | } \hline & 3 \% & 9 \% & 10 \% \\\hline 1 & 0.926 & 0.917 & 0.909 \\\hline 2 & 1.783 & 1.759 & 1.736 \\\hline 3 & 2.577 & 2.531 & 2.487 \\\hline 4 & 3.312 & 3.24 & 3.17 \\\hline 5 & 3.993 & 3.89 & 3.791 \\\hline 6 & 4.623 & 4.486 & 4.355 \\\hline 7 & 5.206 & 5.033 & 4.868 \\\hline 8 & 5.747 & 5.535 & 5.335 \\\hline 9 & 5.247 & 5.995 & 5.759 \\\hline 10 & 6.71 & 6.418 & 6.145 \\\hline\end{array}$$

• A) positive $14,000
• B) negative $100,000
• C) positive $100,000
• D) negative $14,000

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Updated or altered from its original form, often to include new information or corrections.

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DSM-IV

The fourth edition of the Diagnostic and Statistical Manual of Mental Disorders, a guide for diagnosing mental disorders.