Exhibit 8-1
a Project Requires an Initial Investment of $1,500,000 $( r = 10 \% )$

question 3

Multiple Choice

Exhibit 8-1
A project requires an initial investment of $1,500,000 and will return $420,000 each year for six years.
Factors: Present Value af an Annuity $( r = 10 \% )$
$\begin{array} { l l } \text { Year 1 } & 0.9091 \\ \text { Year 2 } & 1.7355 \\ \text { Year 3 } & 2.4869 \\ \text { Year 4 } & 3.1699 \\ \text { Year 5 } & 3.7908 \\ \text { Year 6 } & 4.3553 \end{array}$
-Refer to Exhibit 8-1.Using the net present (NPV) to evaluate this proposal,the company should:

• A)Reject the proposal since the NPV is ($329,226).
• B)Invest in the proposal since the NPV is $1,020,000.
• C)Invest in the proposal since the NPV is $3,329,226.
• D)Invest in the proposal since the NPV is $329,226.
• E)None of the answer choices is correct.

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