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

question 37

Multiple Choice

Use the information below to answer the following question(s) :
The owner of the Krusty Krab is considering selling his restaurant and retiring.An investor has offered to buy the Krusty Krab for $350,000 whenever the owner is ready for retirement.The owner is considering the following three alternatives:
1.Sell the restaurant now and retire.
2.Hire someone to manage the restaurant for the next year and retire.This will require the owner to spend $50,000 now,but will generate $100,000 in profit next year.In one year the owner will sell the restaurant for $350,000.
3.Scale back the restaurant's hours and ease into retirement over the next year.This will require the owner to spend $40,000 on expenses now,but will generate $75,000 in profit at the end of the year.In one year the owner will sell the restaurant for $350,000.
-If the interest rate is 7%,the NPV of alternative #2 is closest to:

• A)$350,000.
• B)$357,196.
• C)$370,561.
• D)$401,121.

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Definitions:

College

An educational institution or part of an institution that offers undergraduate degrees and, in some cases, master's degrees or diplomas.

Ego Identity

A sense of oneself as a distinct, continuous entity, often discussed in the context of Erik Erikson's psychosocial development stages.

Psychosocial Criteria

Refers to standards or principles used to evaluate an individual's psychological and social development or well-being.

Adolescents

Individuals in the transition phase between childhood and adulthood, typically between the ages of 13 and 19, experiencing significant physical, psychological, and social changes.