Which of the Following Is the Correct Equation to Solve

question 30

Multiple Choice

Which of the following is the correct equation to solve for the NPV of the project that has an initial outlay of $30,000,followed by three years of $20,000 in incremental cash inflow? Assume a discount rate of 10%.

• A)NPV = -30,000 + (3 × 20,000)/(1.10)³
• B)NPV = -$30,000 + $20,000/(1.10)¹ + $20,000/(1.10)² + $20,000/(1.10)³
• C)NPV = -$30,000 + $20,000/(1.01)^.10 + $20,000/(1.02)^.10 + $20,000/(1.03)^.10
• D)NPV = -$30,000 + $20,000/(1.1)^.10 + $20,000(1.2)^.10 + $20,000(1.3)^.10

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Definitions:

Analogue Methodology

Research methods that simulate real-life situations in a controlled environment, often used to study behaviors or phenomena that cannot be directly manipulated for ethical or practical reasons.

Internal Validity

The degree to which a study can demonstrate a causal relationship between variables, free from the contamination of other variables that might confound the results.

External Validity

The degree to which a study's findings can be applied to different contexts and diverse individuals.

Generalizability

The extent to which research findings and conclusions can be applied to broader populations or different contexts beyond the study sample.