Based Upon the Following Cash Flows, Should Ooey Gooey Candy

question 50

Multiple Choice

Based upon the following cash flows, should Ooey Gooey Candy Makers introduce a new product, Skinny Minnie Diet Cuisine? The initial investment is $780,000 and the cost of capital is 12.2%.
$$\begin{array} { | c | c | } \hline \text { Years } & \text { Cash Flare } \\\hline 1 & 190,000 \\\hline 2 & 105,000 \\\hline 3 & 105,000 \\\hline 4 & 195,000 \\\hline 5 & 195,000 \\\hline 0 & 195,000 \\\hline\end{array}$$

• A)Yes, the npv is $288,410.60 and the irr is 38.2%.
• B)Yes, the npv is $175,478.98 and the irr is 20.42%.
• C)No, the npv is -$211,589.40 and the irr is 3.24%.
• D)No, the npv is -$75,375.18 and the irr is 11.75%.

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Definitions:

Medical Scientists

Professionals who conduct research aimed at improving overall human health, often through clinical trials, laboratory experiments, and other research methods.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life to date.

Book Value

Represents the value of an asset according to its balance sheet account balance, calculated as the original cost less any depreciation, amortization, or impairment costs.

Salvage Value

The projected remaining value of an asset when it reaches the end of its operational lifespan.