Use the Information for the Question(s)below

question 9

Multiple Choice

Use the information for the question(s) below.
-The owner of a hair salon spends $1,000,000 to renovate its premises,estimating that this will increase her cash flow by $220,000 per year.She constructs the above graph,which shows the net present value (NPV) as a function of the discount rate.At what dollar value should the NPV profile cross the vertical axis?

• A)$780,000
• B)$1,000,000
• C)Cannot be determined because inadequate information is given.
• D)The vertical axis crossing point cannot be calculated since the cash inflows are a perpetuity.

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Definitions:

Arnolfo di Cambio

A prominent Italian architect and sculptor of the late 13th to early 14th century, known for his work on the Florence Cathedral.

Architect

A professional who plans, designs, and oversees the construction of buildings, combining artistic vision with practical considerations.

Giovanni Pisano

An Italian sculptor, painter, and architect who played a significant role in the development of Gothic sculpture in Italy.

Classical Antiquity

A period of cultural history centered around the Mediterranean Sea, comprising the Greco-Roman world from the 8th century BC to the 6th century AD.