Haulin' It Towing Company Is Considering Adding More Tow Trucks

question 20

Multiple Choice

Haulin' It Towing Company is considering adding more tow trucks to its fleet.The cost of the new trucks is $150,000.The project will utilize the risk adjusted discount, the firm has a beta of 1.3, the risk free rate is 7% and the return in the market is 15%.Should Haulin' It add the additional trucks if the expected increased revenues will be as follows?
$$\begin{array} { | c | c | } \hline \text { Years } & \text { Cash Flaws } \\\hline 1 & \text { \$od,00] } \\\hline 2 & 195,000 \\\hline 3 & 110,000 \\\hline\end{array}$$

• A)No, the NPV of the project is -$15,175.19
• B)Yes, the NPV of the project is $75,275.16
• C)No, the NPV of the project is -$9,765.12
• D)Yes, the NPV of the project is $55,050.92

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Definitions:

Cohen's D

Estimate of the magnitude of the difference between the means of two groups measured in standard deviation units.

Cohen's D

An indicator of the magnitude of difference, displaying the standardized deviation between two averages.

Cohen's D

A measure of the size of an effect for a hypothesis test; it is the difference between two means divided by the standard deviation of the data.

Cohen's D

A statistic used to quantify the difference between two group means relative to the standard deviation of the sample.