Webster's Wants to Introduce a New Product That Has a Start-Up

question 75

Multiple Choice

Webster's wants to introduce a new product that has a start-up cost of $7,800.The product has a 2-year life and will provide cash flows of $6,700 in Year 1 and $4,300 in Year 2.The required rate of return is 14 percent.Should the product be introduced? Why or why not?

• A)Yes;the NPV is $1,108.15.
• B)Yes;the IRR is 12.97 percent.
• C)Yes;the IRR is 28.72 percent.
• D)Yes;the NPV is $1,409.27.
• E)No;the IRR is 12.94 percent.

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Definitions:

Polycarbonates

A group of thermoplastic polymers containing carbonate groups in their chemical structures, known for their durability and used in the manufacture of eyewear, DVDs, and bulletproof glass.

Diisocyanate

A chemical compound with two isocyanate groups (-NCO), used primarily in the production of polyurethane foams, elastomers, and coatings.

Polyurethanes

Versatile polymers used in a wide range of applications, formed by reacting a di- or polyisocyanate with a polyol.

Registered Voters

Individuals who are officially recorded on an electoral roll, making them eligible to vote in an election.