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

question 11

Multiple Choice

What happens to the NPV of a two-year project if sales less costs are increased in each year from $1,000 to $1,500? Assume the firm has a 35% tax rate,and a 15% cost of capital.

• A) NPV increases by $812.85.
• B) NPV increases by $528.36.
• C) NPV increases by $500.00.
• D) NPV increases by $282.61.

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