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

question 75

Multiple Choice

Use the information below to answer the following question(s) :
The owner of the Krusty Krab is considering selling his restaurant and retiring. An investor has offered to buy the Krusty Krab for $350,000 whenever the owner is ready for retirement. The owner is considering the following three alternatives:
1. Sell the restaurant now and retire.
2. Hire someone to manage the restaurant for the next year and retire. This will require the owner to spend $50,000 now, but will generate $100,000 in profit next year. In one year the owner will sell the restaurant for $350,000.
3. Scale back the restaurant's hours and ease into retirement over the next year. This will require the owner to spend $40,000 on expenses now, but will generate $75,000 in profit at the end of the year. In one year the owner will sell the restaurant for $350,000.
-Which of the following statements regarding Net Present Value (NPV) is INCORRECT?

• A) The NPV represents the value of the project in terms of cash today.
• B) Good projects will have a positive NPV.
• C) The NPV of a project is the difference between the present value of its benefits and the present value of its costs.
• D) When faced with a set of alternatives, choose the one with the lowest NPV in order to minimize the preset value of costs.

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Definitions:

Proximity And Distance

Factors related to how physical closeness or spatial distance between people influences their interactions and relationships.

Failure Event

refers to a significant incident or situation where expectations are not met, leading to perceived loss, disappointment, or negative outcomes in relation to goals or standards.

Reproach

To express disapproval or disappointment towards someone, usually related to a specific action or behavior.

Hypothetical Situation

A scenario or problem devised for analysis or problem-solving, not based on real events but used for discussion purposes.