A Firm Has a Project with a NPV of -$52

question 22

Multiple Choice

A firm has a project with a NPV of -$52 million. If they have access to risk free government financing that can create an annual tax shield of $5 mil, what is the APV of the project assuming the risk free interest rate is 6%?

• A) -$52 mil
• B) $5 mil
• C) $31 mil
• D) $83 mil

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Definitions:

Retail Outlets

Physical or online stores that sell goods or services directly to consumers.

Intensive Distribution

A marketing strategy that aims to distribute a product as widely and comprehensively as possible across various outlets.

Selective Distribution

A strategy where a product is distributed through a limited number of channels or retailers to maintain exclusivity or control over the brand.

Geographical Area

A specific location, region, or territory defined by natural or artificial boundaries within which a set of activities or operations is conducted.