Alpha Industries Is Considering a Project with an Initial Cost

question 43

Multiple Choice

Alpha Industries is considering a project with an initial cost of $7.4 million.The project will produce cash inflows of $1.54 million a year for seven years.The firm uses the subjective approach to assign discount rates to projects.For this project,the subjective adjustment is +1.5 percent.The firm has a pretax cost of debt of 8.6 percent and a cost of equity of 13.7 percent.The debt-equity ratio is 0.0.65 and the tax rate is 35 percent.What is the net present value of the project?

• A)-$372,951
• B)-$187,016
• C)$48,209
• D)$133,333
• E)$269,480

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Definitions:

Sensory Decline

The gradual reduction of the senses (sight, hearing, taste, smell, and touch) often associated with aging.

Aging

The process of becoming older, which involves changes in the physical structure and functional capabilities of the body over time.

Ageism

Prejudice or discrimination against individuals based on their age, often directed towards older adults.

Empathy

The capability to comprehend and empathize with someone else's emotions.