What Happens to the NPV of a One-Year Project If

question 102

Multiple Choice

What happens to the NPV of a one-year project if fixed costs are increased from $400 to $600, the firm is not profitable, has a 35% tax rate, and employs a 12% cost of capital?

• A) NPV decreases by $200.00.
• B) NPV decreases by $178.57.
• C) NPV decreases by $130.00.
• D)NPV decreases by $113.04.

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Definitions:

Benefit

An advantage or profit gained from something.

Full-size Truck

A category of large trucks designed for heavy duty use and often equipped with significant towing capacity and cargo space.

Product Benefit

A value or advantage that a product offers to its customers, distinguishing it from competitors' products.

Segmentation Variable

A characteristic used to divide a market into distinct segments, such as age, income, preferences, or geographic location.