Use the Following Information to Answer the Question(s)below

question 77

Multiple Choice

Use the following information to answer the question(s) below.
Rearden Metal is evaluating a project that requires an investment of $150 million today and provides a single cash flow of $180 million for sure one year from now.Rearden decides to use 100% debt financing for this investment.The risk-free rate is 5% and Rearden's corporate tax rate is 21%.Assume that the investment is fully depreciated at the end of the year.
-The NPV of this project using the APV method is closest to:

• A)$10 million.
• B)$17 million.
• C)$42 million.
• D)$71 million.

Apply the payback method in evaluating the profitability and risk of investments.

Use real-options analysis and other scenario-based methods in capital budgeting.

Understand the concept of and distinguish between various capital budgeting techniques.

Apply the net present value (NPV) method to evaluate investment projects.

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