A Company Is Considering an Iron Ore Extraction Project That

question 83

Multiple Choice

A company is considering an iron ore extraction project that requires an initial investment of $518,000 and will yield annual cash inflows of $158,000 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) $6,080
• B) $(103,600)
• C) $103,600
• D) $(6,080)

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Definitions:

Ego

In psychoanalytic theory, it is the part of the personality responsible for dealing with reality, mediating between the desires of the id and the constraints of the social world.

Personality

The melding of characteristics that establishes a person's distinct identity.

Superego

Within the realm of psychoanalytic theory, this aspect of a person's psyche serves as a self-judging moral guide, encapsulating the ethical standards assimilated from one's parents and teachers.

Conscience

An inner feeling or voice viewed as acting as a guide to the rightness or wrongness of one's behavior.