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:

Nuclear Strike

A military attack involving the use of nuclear weapons, which can result in massive destruction and significant loss of life due to the explosive blast, heat, and radiation.

Nuclear Balance

A state of stability between opposing powers characterized by the understanding that both sides possess sufficient nuclear weaponry to destroy each other, thereby deterring both from initiating a conflict that might lead to nuclear war.

Bay of Pigs

The Bay of Pigs refers to an unsuccessful invasion of Cuba in 1961 by Cuban exiles backed by the U.S. government aiming to overthrow Fidel Castro's regime.

Cuban People

The inhabitants or citizens of Cuba, a country in the Caribbean, known for their diverse cultural heritage including Spanish and African influences.