Panelli's Is Analyzing a Project with an Initial Cost of $139,000

question 99

Multiple Choice

Panelli's is analyzing a project with an initial cost of $139,000 and cash inflows of $74,000 in Year 1 and $86,000 in Year 2. This project is an extension of current operations and thus is equally as risky as the current company. The company uses only debt and common stock to finance its operations and maintains a debt-equity ratio of .39 The aftertax cost of debt is 5.1 percent, the cost of equity is 13.2 percent, and the tax rate is 21 percent. What is the projected net present value of this project?

• A) $411
• B) $1,109
• C) −$1,807
• D) $938
• E) −$2,399

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Definitions:

Amygdala

A part of the brain's limbic system involved in emotion regulation, emotional learning, and the formation of memories associated with emotional events.

Convolutions

The folds or ridges on the brain's surface, increasing the brain's surface area and its ability to process information.

Fissures

Deep grooves or splits in tissues or organs, including those found in the brain which separate different lobes or areas.

Cortex

The outermost layer of the brain involved in complex functions such as perception, thought, and decision-making.