Use the Information for the Question(s)below

question 7

Multiple Choice

Use the information for the question(s) below.
Iota Industries Market Value Balance Sheet ($ Millions) and Cost of Capital Iota Industries New Project Free Cash Flows (Millions) Assume that this new project is of average risk for Iota and that the firm wants to hold constant its debt to equity ratio.
-The NPV for Iota's new project is closest to:

• A)$25.25 million.
• B)$11.57 million.
• C)$9.00 million.
• D)$18.50 million.

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Definitions:

Joseph Schumpeter

An Austrian economist and political scientist known for his theories on business cycles and innovation. He introduced the concept of creative destruction, which describes how old industries are destroyed and replaced by new ones.

Karl Marx

A 19th-century philosopher, economist, and political theorist known for his critical theories about capitalism and advocacy for socialism.

Marginal Revenue Product

The Marginal Revenue Product indicates the additional revenue generated from employing one more unit of a resource, such as labor or capital.

Acre of Land

An Acre of Land is a unit of area measurement used in the U.S. and British Imperial systems, equivalent to 4,840 square yards or about 4,047 square meters.