Gce Model Questions Vol1 2022 Government Question 35

Practice objective / multiple choice question 35 from the 2022 Gce Model Questions Vol1 Government examination.

Gce Model Questions Vol1 2022 Government Objective / Multiple Choice Hard Difficulty
Question 35 GCE_MODEL_QUESTIONS_VOL1 • 2022 • GOVERNMENT • objective

A local council proposes building a community centre that costs \(£2{,}000{,}000\) to construct. It is expected to generate an annual benefit of \(£300{,}000\) and incur annual operating costs of \(£50{,}000\). The centre has a useful life of 10 years and the council uses a discount rate of 5 %. Calculate the net present value (NPV) of the project and state whether the council should approve it.

Answer Options

A. NPV ≈ -£150,000 (negative); therefore the project should not be approved.
B. NPV ≈ £0 (zero); therefore the project is marginal and may be approved.
C. NPV ≈ £120,000 (positive); therefore the project should be approved.
Correct Answer D. NPV ≈ -£70,000 (negative); therefore the project should not be approved.
Correct Answer
D
Correct Option:
NPV ≈ -£70,000 (negative); therefore the project should not be approved.

About This Question

This is Gce Model Questions Vol1 2022 Government Question 35. It is one of the objective questions from the 2022 Gce Model Questions Vol1 Government examination.

Difficulty level: Hard .

View More Gce Model Questions Vol1 2022 Government Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support