A Firm Is Considering a Project with an Annual Cash

question 49

Multiple Choice

A firm is considering a project with an annual cash flow of £200,000. The project would have a 7-year life, and the company uses a discount rate of 10 per cent. Ignoring income taxes, what is the maximum amount the company could invest in the project and have the project still be acceptable?

• A)£718,200
• B)£1,400,000
• C)£973,600
• D)£200,000

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Definitions:

Acid Equilibrium

The state of balance between the forward and reverse reactions in which an acid donates a proton to a base.

Acid Salt

A type of salt that contains an ionizable hydrogen atom, allowing it to act as an acid under suitable conditions.

Soluble

Ability of a substance to dissolve in a solvent, forming a homogeneous mixture at a molecular or ionic level.

Sodium Chloride

Common salt; an ionic compound with the formula NaCl, essential for life and used in food seasoning and preservation.