Pear Computer Corp

question 20

Multiple Choice

Pear Computer Corp.plans to introduce a new model called the Bartlett,whose sales are expected to grow rapidly until the computer becomes obsolete in five years.Net cash inflows to be realized at the end of the first year are $1 million,and they are expected to increase $1 million per year for each of the remaining 4 years.Cash outflows for production expenses are $3.5 million today and an additional $1.5 million at the end of the second year to increase capacity.If Pear's cost of capital is 10%,what is the project's NPV? Round to nearest whole dollar amount.

• A) $9,412,700
• B) $5,912,919
• C) $6,173,452
• D) $5,123,936
• E) $8,998,418

---

Definitions:

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant or unchanging stimuli, allowing organisms to focus on relevant changes in their environment.

Perceptual Invariance

The ability of the perceptual system to recognize objects across varying conditions despite changes in angle, distance, or lighting.

Adjusting Differences

The process of accounting for variables that may impact the outcome of a study or analysis, in order to isolate the effect of the independent variable.

False Alarm

An instance in which a warning signal indicates a threat or problem that does not actually exist.