You Are Considering a Project That Has Been Assigned a Discount

question 55

Multiple Choice

You are considering a project that has been assigned a discount rate of 14 percent.If you start the project today,you will incur an initial cost of $8,500 and will receive cash inflows of $5,550 a year for two years.If you wait one year to start the project,the initial cost will rise to $9,200 and the cash flows will increase to $5,800 a year for two years.What is the value of the option to wait?

• A)-$331.40
• B)-$194.46
• C)$228.51
• D)$230.49
• E)$334.68

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Definitions:

Neurotransmitter Levels

The concentration of chemical messengers in the brain that transmit signals across synapses from one neuron to another.

Hippocampus

A major component of the brain in humans and other vertebrates, involved in memory formation, navigation, and the emotional response system.

Lead

A toxic metal that can cause harmful effects when absorbed by the body, historically used in products like paint and gasoline.

Reticular Formation

A complex network of neural pathways in the central region of the brainstem that plays a key role in regulating alertness and sleep-wake cycles.