Greenwich Plc Is Considering Adding Two New Products at a Subsidiary

question 32

Multiple Choice

Greenwich plc is considering adding two new products at a subsidiary to improve its overall competitiveness. The new products are enthusiastically supported by the managers responsible and an immediate decision is required. It is normal for the managers to calculate the net present value (NPV) for the projects before it is accepted or rejected.
Details of the proposals

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Calculate the Net Present Value of the cash flows for Project A

• A)£13,200.
• B)£25,200.
• C)£28,942.
• D)£18,942.

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Definitions:

Saving Rate

The portion of income that is not spent on consumption but rather saved or invested.

Double Taxation

The imposition of taxes on the same income, assets, or financial transaction at two different levels of government, such as corporate income being taxed both to the corporation and to the shareholders when distributed as dividends.

Economic Growth

A rise in the production of goods and services per capita over a certain time frame.

Saving Rate

The proportion of income that is not spent on consumption but is instead saved by individuals or entities.