1. Sol's Sporting Goods is expanding, and as a result expects additional operating cash flows of $26,000 a year for 4 years. This expansion requires $44,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires an additional $5,000 of net working capital throughout the life of the project; Sol expects to recover this amount at the end of the project. What is the net present value of this expansion project at a 16 percent required rate of return?
$25,514.15
$16,227.45
$27,928.31
$21,033.33
$29,416.08
2. Forecasting risk is best defined as:
reality risk.
value risk.
potential risk.
management risk.
estimation risk.