Dressler Tech Is Considering a 3-Year Project with a Discount

question 73

Multiple Choice

Dressler Tech is considering a 3-year project with a discount rate of 15 percent, an initial cost of $95,000, projected sales of 1,300 units on the last day of each year, and a cash flow per unit of $38. The project can be abandoned following the sales on the last day of Year 2 at which time the project's assets could be sold for an estimated $40,000. What is the net present value of this project at Time 0 if the sales forecast for Year 3 of the project is revised such that there is a 50/50 chance that the sales will be either 1,100 or 1,500 units a year?

• A) −$13,474
• B) −$2,526
• C) $19,172
• D) $8,192
• E) $18,887

---

Definitions:

Attract

The act or capability of drawing something in, either by physical means, like gravity, or through other qualities like beauty, smell, or functionality.

Systemic Acquired Resistance

An overall increase in resistance of plants to a wide range of pathogens induced by a localized exposure to a pathogen.

Salicylic Acid

A beta hydroxy acid used in skincare and medicine, known for its role in treating acne, reducing inflammation, and exfoliating the skin.

Plant Hormone

Extracellular signaling molecule of plants; exerts an effect on target cells at very low concentration. E.g., auxin, gibberellin.