Lasik Vision Inc A) -$3055
B) -$34

question 96

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. $$\begin{array} { l c c c c } \text { Old WACC: } & 8.00 \% & { \text { New WACC: } 9.75 \% } \\\text { Year } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows } & - \$ 1,000 & \$ 410 & \$ 410 & \$ 410\end{array}$$

• A) -$30.55
• B) -$34.12
• C) -$32.50
• D) -$28.60
• E) -$29.25

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Definitions:

Unpaid Placement

Refers to instances where products or services are featured in media or events without direct compensation, typically for promotional purposes.

Publicity

Nonpersonal stimulation of demand for a good, service, place, idea, event, person, or organization by unpaid placement of information in print or broadcast media.

Nonpersonal Stimulation

Nonpersonal stimulation in marketing refers to promotional activities that do not involve direct contact with the consumer, such as advertising, sales promotion, and public relations.

Pulling Strategy

Promoting a product by generating consumer demand for it, primarily through advertising and sales promotion appeals.