Neco 2021 Data Processing Question 49

Practice objective / multiple choice question 49 from the 2021 Neco Data Processing examination.

Neco 2021 Data Processing Objective / Multiple Choice Hard Difficulty
Question 49 NECO • 2021 • DATA_PROCESSING • objective

A small business is evaluating a 5‑year project using a spreadsheet. The initial investment is \(\text{₦}500,000\). Expected cash inflows are:\n\nYear 1: \(\text{₦}150,000\)\nYear 2: \(\text{₦}180,000\)\nYear 3: \(\text{₦}200,000\)\nYear 4: \(\text{₦}220,000\)\nYear 5: \(\text{₦}250,000\)\n\nThe discount rate is 12\% per annum.\n\n(a) Compute the net present value (NPV) of the project (round to the nearest naira).\n(b) Determine the pay‑back period (in years, to two decimal places).\n(c) Based on the NPV and pay‑back period, should the project be undertaken?

Answer Options

Correct Answer A. NPV = ₦201,094; Pay‑back period = 2.85 years; Project should be undertaken.
B. NPV = ₦-45,000; Pay‑back period = 4.10 years; Project should not be undertaken.
C. NPV = ₦201,094; Pay‑back period = 2.85 years; Project should not be undertaken.
D. NPV = ₦150,000; Pay‑back period = 3.20 years; Project should be undertaken.
Correct Answer
A
Correct Option:
NPV = ₦201,094; Pay‑back period = 2.85 years; Project should be undertaken.

About This Question

This is Neco 2021 Data Processing Question 49. It is one of the objective questions from the 2021 Neco Data Processing examination.

Difficulty level: Hard .

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