A Company Has Cash Outflows of $21 275 Starting Today

question 27

Multiple Choice

A company has cash outflows of $21 275 starting today for each of the next 5 years. After that they will have cash inflows of $16 000 for each of the following 7 years. The discount rate is 9% compounded annually. What is the NPV?

• A) -$30 415.15
• B) -$34 015.15
• C) -$4015.15
• D) -$341.51
• E) -$41.51

---

Definitions:

Variable

An element, feature, or factor that is subject to change, often used in financial analysis, statistics, and scientific research.

Absorption

In accounting, it refers to the process of incorporating all costs of production into the value of a product, including both direct and indirect expenses.

Margin Of Safety Ratio

A financial metric that measures the difference between actual or projected sales and the break-even point.

Margin Of Safety

The difference between actual or expected sales and sales at the break-even point.