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

Grasp the principle of rational decision-making and opportunity cost.

Differentiate between different economic systems (pure command, mixed, and pure capitalism) and their characteristics.

Comprehend the concepts of comparative and absolute advantage in production.

Realize the importance of specialization and how it affects productivity.

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Definitions:

Ecotourism

A form of sustainable travel to natural areas that conserves the environment and improves the well-being of local people.

Socioeconomic Involvement

Engagement or participation of individuals or organizations in activities aimed at improving social and economic conditions within a community.

Conservation

Efforts and initiatives focused on protecting the natural environment, preserving biological diversity, and sustaining natural resources for future generations.

Media Products

Refers to various forms of content created and distributed via different media channels, such as television, radio, newspapers, and digital platforms.