A Given Project Requires a $28,500 Investment and Is Expected $$\begin{array} { c c c } i = 10 \% & i = 10 \% / 4 & i = 10 \% / 1 \\n = 1 & n = 2 & n = 3 \\\hline .9091 & .8264 & .7513\end{array}$$

question 65

Multiple Choice

A given project requires a $28,500 investment and is expected to generate end-of-period annual cash inflows of $12,000 for each of three years.Assuming a discount rate of 10%,what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$$\begin{array} { c c c } i = 10 \% & i = 10 \% / 4 & i = 10 \% / 1 \\n = 1 & n = 2 & n = 3 \\\hline .9091 & .8264 & .7513\end{array}$$

• A) $0.00
• B) $2,668.00
• C) ($7,461.00)
• D) $1,341.60
• E) $29,841.60

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) incurred to produce, store, and sell one unit of a product.

Variable Costing

An accounting method that only considers variable costs for product costing, excluding fixed overheads.

Net Operating Income

Net operating income is the total profit a company generates from its operations, excluding taxes and interest, highlighting operational efficiency.