Mead,IncMay Invest $20 Million in a New Fiber Optic Project

question 2

Multiple Choice

Mead,Inc.may invest $20 million in a new fiber optic project.Due to market conditions,annual production costs and revenues are forecasted at $10 million and $8 million,respectively,starting next year.Revenues are expected to grow at 4.0% and interest rates are 6.0%.What is the change in value if the project is commenced in 5 years instead of today? (Use static analysis.)

• A) $8.84 million
• B) $10.84 million
• C) $12.84 million
• D) $14.84 million

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