A Company Is Considering a Project with Annual After-Tax Cash

question 39

Multiple Choice

A company is considering a project with annual after-tax cash flows of $5,600.00 per year for six years. The company's cost of capital is 14 percent. Present and future value factors for a 14 percent interest rate for six years are as follows: $\begin{array}{|l|l|}\hline \text { Future value of } \$ 1 & 2.195 \\\hline \text { Present value of } \$ 1 & 0.456 \\\hline \text { Future value of a series of equal payments } & 8.536 \\\hline \text { Present value of a series of equal payments } & 3.889 \\\hline\end{array}$
Using the net present value method, what is the maximum amount that the company should invest?

• A) $21,778.40
• B) $47,801.60
• C) $12,292.00
• D) $2,553.60

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Definitions:

Unconscious Influences

Effects on behavior, thoughts, or emotions that occur without conscious awareness, originating from the unconscious mind.

Freud's Theory

A set of psychoanalytic theories developed by Sigmund Freud that emphasizes unconscious motivations and conflicts as drivers of human behavior, including ideas like the id, ego, and superego.

Oedipus Complex

A concept in psychoanalytic theory referring to a child's unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.

Same Sex

Relating to or involving individuals of the same gender.