Calco Is a Multi-Divisional Firm with a Weighted Cost of Capital

question 41

Multiple Choice

Calco is a multi-divisional firm with a weighted cost of capital of 14 percent and a risk-adjusted discount rate for its can division of 17 percent.A planned expansion in the can division requires a net investment of $170,000 and results in expected cash inflows of $42,000 a year for seven years.Should Calco invest in this expansion?

• A)Yes, NPV = $10,096
• B)Yes, NPV = $9,896
• C)No, NPV = -$5,276
• D)No, NPV = -$9,896

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Definitions:

Chest Wall

Refers to the structures that enclose and protect the thoracic cavity, including the ribs, sternum, and intercostal muscles.

Fluid

A substance that flows and can take the shape of the container that holds it; can be a liquid or gas.

Emphysema

A long-term, progressive lung disease characterized by shortness of breath and destruction of air sacs in the lungs, affecting their elasticity.

Pulmonary Disease

A term for diseases affecting the lungs and other parts of the respiratory system.