The Following Information Pertains to an Investment What Is the Present Value of the Annual Cash Flow

question 117

Multiple Choice

The following information pertains to an investment: $$\begin{array} { l r } \text { Investment } & \$ 140,000 \\\text { Annual revenues } & \$ 96,000 \\\text { Annual variable costs } & \$ 32,000 \\\text { Annual fixed out-of-pocket costs } & \$ 20,000 \\\text { Discount rate } & 12 \% \\\text { Expected life of project } & 8 \text { years }\end{array}$$ What is the present value of the annual cash flow (rounded to the nearest whole number) ?

• A) $136,822
• B) $152,538
• C) $204,884
• D) $218,592

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Definitions:

Medicare

A federal health insurance program in the United States for people aged 65 and older, and for some younger people with disabilities.

Health Benefits

The positive effects or outcomes on physical, mental, and social well-being obtained through healthcare services, good nutrition, exercise, and healthy lifestyle choices.

Government Transfer Program

Programs operated by governments to redistribute income across various segments of society, often from those with higher income to those in need, such as welfare or social security.

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Households earning significantly below the median income level of a region, often facing financial difficulties and limited access to basic needs and services.