Health Bars Is Considering a Two- Year Advertising Campaign

question 8

Multiple Choice

Health Bars is considering a two- year advertising campaign. The campaign will cost $50,000 at the end of the first year and $60,000 at the end of two years. The managers of Health Bars have estimated that the campaign will generate $40,000 a year in additional profit for the next three years. If the discount rate is 5 percent, what is the net present value of the advertising campaign?

• A)$2,542
• B)$6,889
• C)$12,582
• D)$5,200

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Definitions:

Pinworms

A common intestinal parasite, Enterobius vermicularis, that causes itching around the anus due to its nocturnal egg-laying behavior.

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A thin, transparent adhesive tape made from cellulose, commonly used for sealing, binding, and minor repairs.

Paralytic Ileus

A temporary paralysis of a segment of the intestines that halts the movement of materials through the bowel, often occurring after abdominal surgery.

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Noises made by the movement of the intestines as they push food through the digestive system, considered a normal and healthy sign during physical examination.