Use the Information Below to Answer the Following Question(s)

question 24

Multiple Choice

Use the information below to answer the following question(s) :
The owner of the Krusty Krab is considering selling his restaurant and retiring.An investor has offered to buy the Krusty Krab for $350,000 whenever the owner is ready for retirement.The owner is considering the following three alternatives:
1.Sell the restaurant now and retire.
2.Hire someone to manage the restaurant for the next year and retire.This will require the owner to spend $50,000 now,but will generate $100,000 in profit next year.In one year the owner will sell the restaurant for $350,000.
3.Scale back the restaurant's hours and ease into retirement over the next year.This will require the owner to spend $40,000 on expenses now,but will generate $75,000 in profit at the end of the year.In one year the owner will sell the restaurant for $350,000.
-If the interest rate is 7%,the alternative with the highest NPV is:

• A)Alternative #1 with an NPV of approximately $350,000.
• B)Alternative #2 with an NPV of approximately $370,561.
• C)Alternative #3 with an NPV of approximately $357,196.
• D)Alternative #2 with an NPV of approximately $380,561.

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Definitions:

Level II

A term that can refer to various stages of progress, proficiency, or achievement in different contexts, requiring further specificity to define accurately.

Authority

The power or right to command, create, change, or otherwise act. The successful leader uses both formal and informal authority to accomplish goals.

Secular Ethics

A moral philosophy that bases ethical considerations on principles and values not derived from religious beliefs, focusing on human reasoning and society's well-being.

Level III

Typically refers to a moderate or intermediate stage or level in a hierarchical scale of values, complexity, or importance.