A Project Has the Following Cash Flows: C₀ = −100,000;

question 47

Multiple Choice

A project has the following cash flows: C₀ = −100,000; C₁ = 50,000; C₂ = 150,000; C₃ = 100,000. If the discount rate changes from 12 percent to 15 percent, what is the CHANGE in the NPV of the project (approximately) ?

• A)12,750 increase
• B)12,750 decrease
• C)14,240 increase
• D)14,240 decrease

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Definitions:

Major

Referring to the most prevalent or significant component, outcome, or factor in a given context, often contrasted with "minor."

Secondary Alcohol

An organic compound where the hydroxyl (—OH) group is bonded to a carbon atom that is attached to exactly two other carbon atoms.

T-butyl Alcohol

A common name for tert-butyl alcohol, an organic compound with the formula (CH3)3COH, used as a solvent and in the production of other chemicals.

Ethanol

A two-carbon alcohol with the formula CH3CH2OH, commonly used as a solvent and in alcoholic beverages.