Lasik Vision Inc

question 75

Multiple Choice

Lasik Vision Inc. recently analyzed the project whose cash flows are shown below. However, before Lasik decided to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected.

• A) -$59.03
• B) -$56.08
• C) -$53.27
• D) -$50.61
• E) -$48.08

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Definitions:

Null Hypothesis

A statement used in hypothesis testing that assumes there is no significant difference or effect.

Research Hypothesis

A specific, testable prediction made before conducting research, often proposing a relationship between variables.

Null Hypothesis

The default assumption that there is no significant difference or relationship between variables being studied.

Directional Hypothesis

A directional hypothesis predicts the specific direction of the relationship between variables, such as one variable increasing as the other decreases.