Westover Farms Has Developed a New Strain of Feed Corn

question 180

Multiple Choice

Westover Farms has developed a new strain of feed corn which is expected to produce more ears per acre. The company is now analyzing the value of actually planting and harvesting their first crops of this strain. The net present value (NPV) of the project is $740,000. This value was computed assuming that the project will last through five growing seasons. If Westover would include an option to abandon in the NPV computation, the NPV would:

• A) Not be affected.
• B) Would decrease over the life of the project.
• C) Would decrease, but only for the first year of the project.
• D) Increase, at least in the early years of the project.
• E) Increase, but only if the project continues for the entire five years.

---

Definitions:

Pyroclastic Column

A dense, vertical cloud of hot volcanic ash, gas, and debris that rises from a volcanic eruption, capable of causing widespread destruction.

Volcanic Ash

Fine particles of rock and glass created by volcanic eruptions.

Laki Eruption

A major volcanic event in 1783-1784 from the Laki fissure and the Grímsvötn volcano in Iceland, which released large amounts of sulfur dioxide, causing significant environmental and health impacts in Europe.

Aerosols

Very small solid particles or drops of liquid dispersed in the atmosphere.