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

question 107

Multiple Choice

What happens to the NPV of a one-year project if fixed costs are increased from $400 to $600,the firm is profitable,has a 35% tax rate,and employs a 12% cost of capital?

• A) NPV decreases by $200.00.
• B) NPV decreases by $173.91.
• C) NPV decreases by $130.00.
• D) NPV decreases by $113.04.

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Definitions:

Lottery Drawing

A random selection process where winners are chosen from participants who have purchased tickets, often used for prizes or allocation of scarce resources.

Conformity

The act of matching attitudes, beliefs, behaviors, and practices to societal or group norms.

Group's Attractiveness

The qualities or attributes of a group that draw members to it and contribute to their desire to belong and participate actively.

Cohesiveness

The degree to which members of a group or team are attracted to each other and motivated to stay in the group.