Suppose You Are Looking to Add More Capacity to Your

question 64

Multiple Choice

Suppose you are looking to add more capacity to your current manufacturing plant.The new project will cost $6 million up front and is projected to increase revenue $1.5 million a year for each of the next 5 years.If the interest rate is 8%,what is this project's NPV and is it a profitable investment?

• A) $10,935; yes it is profitable
• B) -$10,935; no it is not profitable
• C) $944,444; yes it is profitable
• D) -$944,444; no it is not profitable

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Definitions:

Duty of Care

A legal obligation imposed on an individual requiring adherence to a standard of reasonable care while performing any acts that could harm others.

Vicarious Liability

A legal principle where one party is held liable for the actions of another party, typically in employer-employee relationships.

Duty of Care

Refers to the legal obligation to adhere to a standard of reasonable care while performing any acts that could foreseeably harm others.

Physical Injury

Harm or damage to a person's body as a result of an accident, negligence, or intentional act.