Last Month, Standard Systems Analyzed the Project Whose Cash Flows

question 21

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 cost of capital (r) . The Fed's action did not affect the forecasted cash flows. By how much did the change in the r affect the project's forecasted NPV? Note that a project's expected NPV can be negative, in which case it should be rejected. $\begin{array} { l c c c c } \text { Old r: } & 10.00 \% & \text { New r: } & 11.25 \% \\\text { Year } & 0 & 1 & 2 & 3 \\\text { Cash flows } & - \$ 1,000 & \$ 410 & \$ 410 & \$ 410\end{array}$

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

---

Definitions:

Racial/Ethnic Group

A category of people identified based on common ancestry, cultural heritage, physical appearance, or social identification markers.

Sexual Harassment

Unwanted or uninvited verbal or physical behavior of a sexual nature, especially by a person in authority towards a subordinate.

College Campuses

The physical grounds and buildings of institutions of higher education, where academic, social, and residential activities for students and faculty occur.

Child Sexual Abuse Prevention

Efforts and measures taken to protect children from sexual assault, exploitation, and abuse.