Corner Jewelers, Inc A) ?$5903
B) ?$56

question 38

Multiple Choice

Corner Jewelers, Inc.recently analyzed the project whose cash flows are shown below.However, before the company decided to accept or reject the project, the Federal Reserve changed interest rates and therefore the firm's cost of capital (r) .The Fed's action did not affect the forecasted cash flows.By how much did the change in the r affect the project's forecasted NPV? Note that a project's expected NPV can be negative, in which case it should be rejected. $$\begin{array} { l c c c c } \text { Old r: } & 8.00 \% & \text { New r: } & 11.25 \% \\\text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows } & - \$ 1,000 & \$ 410 & \$ 410 & \$ 410\end{array}$$

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

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Definitions:

Capacity Analysis

An assessment process to determine the maximum level of output or production that a facility can sustain with the existing resources.

Time-Driven Activity-Based Costing

A refinement of activity-based costing that uses time as the main cost driver to allocate costs to products or services.

Order Fulfillment Department

The division within a company responsible for processing and delivering orders to customers.

Capacity Analysis

entails assessing the maximum output level an organization can achieve with its current resources, considering constraints like space and machinery.