Pear Computer Corp

question 20

Multiple Choice

Pear Computer Corp.plans to introduce a new model called the Bartlett,whose sales are expected to grow rapidly until the computer becomes obsolete in five years.Net cash inflows to be realized at the end of the first year are $1 million,and they are expected to increase $1 million per year for each of the remaining 4 years.Cash outflows for production expenses are $3.5 million today and an additional $1.5 million at the end of the second year to increase capacity.If Pear's cost of capital is 10%,what is the project's NPV? Round to nearest whole dollar amount.

• A) $9,412,700
• B) $5,912,919
• C) $6,173,452
• D) $5,123,936
• E) $8,998,418

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Definitions:

Unmarried Partner

An individual in a committed romantic relationship who lives with another individual without being legally married to them.

Buy The Other's Interest

To purchase the ownership stake of a partner or shareholder in a business, effectively transferring their portion of ownership to the buyer.

Privately Owned

Refers to assets, enterprises, or businesses that are owned by individuals or private entities, not controlled by the government.

Residential Property

Real estate that is used for housing purposes including single-family homes, apartments, townhouses, and other living spaces.