SAP IncReceived a $2 Million Grant Under Its Small Business Innovation

question 4

Multiple Choice

SAP Inc.received a $2 million grant under its Small Business Innovation program.SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards.The firm estimates that each shipyard spends $600,000 a year on storm water clean-up efforts.If SAP is able to sign up and retain four shipyards from the first year onwards,what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 15% per year? Assume a cost of operations and other costs for SAP equal 40% of revenue.

• A)$6.3 million
• B)$6.7 million
• C)$7.6 million
• D)$7.9 million
• E)$8.3 million

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Definitions:

Dissociative Identity Disorder

A mental disorder characterized by the presence of two or more distinct personality states or identities within an individual, often resulting from severe trauma.

Distinct Personalities

Unique combinations of traits and characteristics that make an individual's behavior patterns uniquely identifiable.

Koro

A cultural-specific syndrome that involves an intense fear that one's genitals are retracting and will disappear.

DSM-IV

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, a manual published by the American Psychiatric Association which outlines the standard criteria for the classification of mental disorders.