Last Month,Standard Systems Analyzed the Project Whose Cash Flows Are

question 40

Multiple Choice

Last month,Standard Systems analyzed the project whose cash flows are shown below.However,before the decision to accept or reject the project took place,the Federal Reserve changed interest rates and therefore the firm's WACC.The Fed's action did not affect the forecasted cash flows.By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's expected NPV can be negative,in which case it should be rejected.

• A)−$18.89
• B)−$19.88
• C)−$20.93
• D)−$22.03
• E)−$23.13

---

Definitions:

Warranties

Legally binding guarantees provided by a manufacturer or seller to a buyer, assuring the product will meet specified standards of performance and quality.

Long-Term Customer Relationships

Building enduring connections with customers, focusing on loyalty and repeated business through ongoing satisfaction and engagement.

Financial Rewards

Benefits given in the form of money, such as salaries, bonuses, or commissions, as compensation for employment or achieving specific goals.

Sales Engineers

Professionals who specialize in understanding complex products or services and use their technical knowledge to help sales teams and customers through the sales process.