Silverman Co A) $3212
B) $35

question 7

Multiple Choice

Silverman Co.is considering Projects S and L,whose cash flows are shown below.These projects are mutually exclusive,equally risky,and not repeatable.If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV,how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. $\begin{array}{lccccc}\text { WACC: } & 8.75 \% & & & \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\\mathrm{CF}_{\mathrm{S}} & -\$ 1,100 & \$ 375 & \$ 375 & \$ 375 & \$ 375 \\\mathrm{CF}_{\mathrm{L}} & -\$ 2,200 & \$ 725 & \$ 725 & \$ 725 & \$ 725\end{array}$

• A) $32.12
• B) $35.33
• C) $38.87
• D) $40.15
• E) $42.16

Analyze the effect of temporary versus permanent tax cuts on aggregate demand.

Identify the factors influencing the shift in the aggregate demand curve due to changes in fiscal and monetary policy.

Understand the concept of crowding out and its effect on fiscal policy effectiveness.

Explain the Marginal Propensity to Consume (MPC) and its role in determining the multiplier effect.

---

Definitions:

Ruffini End Organ

Sensory receptors located in the skin and tendons that detect skin stretch and joint activity, contributing to the sense of proprioception.

Merkel Disks

Slow-adapting tactile receptors in the skin that respond to light touch and pressure.

Cerebral Cortex

The outer layer of the brain's cerebrum, involved in many complex brain functions including memory, attention, perception, cognition, awareness, thought, language, and consciousness.

Broca Area

An area located within the dominant hemisphere's frontal lobe (typically the left side) of the brain, responsible for controlling speech generation.