TABLE 16.1 Use the Information to Answer the Following Question(s)

question 19

Multiple Choice

TABLE 16.1
Use the information to answer the following question(s) .
Jensen Aquatics Inc., which manufactures and sells scuba gear worldwide, is considering an investment in either Europe or Great Britain. Consider the following cash flows for each project, assume a 12% wacc, and consider these to be average risk projects for the firm. Answer the questions that follow.

-Refer to Table 16.1.If the euro was forecast to remain constant at $1.00/euro throughout the investment period,how would the investment decision now be characterized?

• A)The project would be even better than forecast.
• B)The British investment should be chosen over the European investment.
• C)The NPV is $6,420.
• D)All of the above are true.

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Definitions:

Profit-Maximizing

A strategy or behavior aimed at increasing a firm's profits to the highest possible level given its production and cost constraints.

Pure Monopolist

A market scenario where a single seller completely dominates the market, facing no competition and controlling the price of the goods or services offered.

MR

Marginal Revenue, which refers to the additional income generated from selling one more unit of a good or service.

Variable Costs

Costs that change in proportion to the level of output produced.