Cooper Enterprises Sells Outdoor Swimming Pools and Currently Has an After-Tax

question 61

Multiple Choice

Cooper Enterprises sells outdoor swimming pools and currently has an after-tax cost of capital of 12 percent. Reinhold's sells pool decks and has an after-tax cost of capital of 9 percent. Cooper
Enterprises is considering adding pool decks as part of their sales lineup. They estimate that sales
From these decks could become 15 percent of their overall sales. The initial cash outlay for this
Project is $75,000. The expected net cash inflows are $14,000 a year for eight years. What is the
Net present value of this project to Cooper Enterprises?

• A) -12,177.50
• B) -$5,453.04
• C) $2,487.47
• D) $4,979.00
• E) $14,110.59

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Definitions:

Quota

A government-imposed trade restriction limiting the number or monetary value of goods that can be imported or exported.

Nations Trade

The exchange of goods, services, and capital between countries, driven by comparative advantages and specialization.

Frederic Bastiat

A 19th-century French economist and writer known for his advocacy of classical liberalism and his witty criticisms of protectionism.

Trade Protectionism

Government policies designed to restrict international trade to protect domestic industries from foreign competition.