A Firm Is Considering a Project with an Annual Cash

question 28

Multiple Choice

A firm is considering a project with an annual cash flow of £240,000. The project would have an 8-year life, and the company uses a discount rate of 12 per cent. Ignoring income taxes, what is the maximum amount the company could invest in the project and have the project still be acceptable (rounded) ?

• A)£977,480
• B)£1,125,228
• C)£1,160,582
• D)£1,192,320

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Definitions:

Raven Progressive Matrices

A non-verbal group test typically used to measure abstract reasoning and regarded as a non-verbal estimate of fluid intelligence.

Stanford-Binet Scale

A standardized test that measures intelligence and cognitive abilities in individuals, originally developed to identify educational needs in children.

Wechsler Intelligence Scale

A series of standardized tests used to evaluate cognitive abilities and intellectual potential across different age groups.

Gifted

A term used to describe individuals, often children, who show exceptional levels of aptitude or competence in one or more domains at an early age.