Johnson Entertainment Systems Is Setting Up to Manufacture a New

question 16

Multiple Choice

Johnson Entertainment Systems is setting up to manufacture a new line of video game consoles. The cost of the manufacturing equipment is $1,750,000. Expected cash flows over the next four years are $725,000, $850,000, $1,200,000, and $1,500,000. Given the company's required rate of return of 15 percent, what is the NPV of this project? (Do not round intermediate computations. Round final answer to nearest dollar.)

• A) $1,169,806
• B) $2,919,806
• C) $4,669,806
• D) $3,122, 607

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Definitions:

Regulation

Rules or directives made and maintained by an authority to control or govern behavior within a system.

Malicious Prosecution

A tort action based on criminal or quasi-criminal prosecution motivated by ill will toward the accused and lacking reasonable evidential grounds for proceeding.

Qualified Privilege

Exemption from liability for defamatory statements made pursuant to a duty or special interest, so long as the statement was made honestly and without malice and was circulated only to those having a right to know.

Negligence

A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances, leading to unintended harm.