Shanghai Shipping Is Considering Investing in a Project That Requires

question 41

Multiple Choice

Shanghai Shipping is considering investing in a project that requires an after-tax initial investment of 156 million and is expected to produce after-tax cash inflows of $40 million for each of the next five years.The firm's cost of capital is 8%.Based on this information, the NPV of the project is _________ million and the firm should _________ the project.

• A)$3.7; accept
• B)-$3.7, reject
• C)$159.37, accept
• D)-$159.37, reject
• E)none of the above

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Definitions:

United States Army

The land service branch of the United States Armed Forces, responsible for land-based military operations.

Classical Economics

A school of thought in economics that emphasizes the importance of free markets, competition, and self-regulation of markets based on the supply and demand principle.

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