Westover Farms Has Developed a New Strain of Feed Corn

question 255

Multiple Choice

Westover Farms has developed a new strain of feed corn which is expected to produce more ears per acre. The company is now analyzing the value of actually planting and harvesting their first
Crops of this strain. The net present value (NPV) of the project is $740,000. This value was
Computed assuming that the project will last through five growing seasons. If Westover would
Include an option to abandon in the NPV computation, the NPV would:

• A) Not be affected.
• B) Would decrease over the life of the project.
• C) Would decrease, but only for the first year of the project.
• D) Increase, at least in the early years of the project.
• E) Increase, but only if the project continues for the entire five years.