Dickson Co

question 13

Multiple Choice

Dickson Co.is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.

• A) $250.15
• B) $277.94
• C) $305.73
• D) $336.31
• E) $369.94

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Definitions:

Yield Curve

A graph that shows the relationship between interest rates and the time to maturity of debt for a given borrower in a given currency.

Perpetuity

A type of annuity that pays an infinite series of cash flows with no end, often used as a model for valuing stocks.

Interest Rates

The price, expressed as a percentage of the principal, that a lender demands from a borrower for the borrowing of assets.

Frederick Macaulay

An economist known for pioneering the concept of bond duration, which measures the sensitivity of a bond's price to changes in interest rates.