The NPV of an Initial Investment of $1,500,000 with a 10

question 36

Multiple Choice

The NPV of an initial investment of $1,500,000 with a 10% required rate of return over 10 years is calculated at $120,000. What should the company do?

• A) Invest - the NPV is greater than $0.
• B) Not invest - the NPV is less than the 10% stated.
• C) Find a way to reduce the initial investment to $1,200,000 and still yield the same amount.
• D) None of the above

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Definitions:

Easement

A legal right to use another's land for a specific limited purpose without owning it.

Orally

Expressed in spoken rather than written words; pertaining to verbal communication.

Access

The ability or right to enter, approach, or use something, such as a building, information, or a service.

Period of Years

A specified duration or length of time, often used in legal contexts to describe the term of a contract or agreement.