TexMex Food Company Is Considering a New Salsa Whose Data

question 21

Multiple Choice

TexMex Food Company is considering a new salsa whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other TexMex products and would reduce their pre-tax annual cash flows. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.)

• A) $3,636
• B) $3,828
• C) $4,019
• D) $4,220
• E) $4,431

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Definitions:

Shift

A change in position, direction, or tendency, often indicating a transformation in conditions or strategies.

Traits

Traits refer to distinguishable characteristics or attributes of organisms, which can be physical, such as color and size, or behavioral.

Geographic Isolation

Refers to populations of organisms that are separated from exchanging genetic material with other organisms of the same species by physical barriers.

Convergent Evolution

The process where organisms not closely related independently evolve similar traits as a result of having to adapt to similar environments or ecological niches.