A Company Is Considering an Iron Ore Extraction Project Which

question 43

Multiple Choice

A company is considering an iron ore extraction project which requires an initial investment of $508,000 and will yield annual cash flows of $154,000 for 4 years.The company's hurdle rate is 9%.What is the NPV of the project?
Present value of 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) positive $101,600
• B) negative $9040
• C) positive $9040
• D) negative $101,600

---

Definitions:

T-test

A statistical method that evaluates whether there is a significant difference between the average values of two distinct groups.

Denominator

In a fraction, the number below the division line, indicating the total number of parts.

Degrees of Freedom

The volume of exclusive values or quantities that can be allotted to a statistical distribution.