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

question 37

Multiple Choice

Use the following information to answer the question(s) below.
Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now,$450,000 two years from now,and $650,000 three years from now.
-If the appropriate interest rate is 10%,then Nielson Motors should:

• A)invest in this opportunity since the NPV is positive.
• B)not invest in this opportunity since the NPV is positive.
• C)invest in this opportunity since the NPV is negative.
• D)not invest in this opportunity since the NPV is negative.

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Definitions:

Liquidation Payment

The payout received by investors or creditors during the liquidation of a company, prioritizing payments according to seniority of claims.

Preferred Stock

represents ownership in a corporation with a claim on assets and earnings before common stockholders, often paying fixed dividends.

Par Value

The nominal value of a bond or stock as declared by the issuer, which might not match its value on the market.

Annual Dividend

The annual dividend is the total amount of dividend payments a company distributes to its shareholders over a year.