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

question 70

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.
-If the interest rate is 7%,the alternative with the lowest NPV is:

• A)Alternative #1 with an NPV of approximately $350,000.
• B)Alternative #2 with an NPV of approximately $370,561.
• C)Alternative #3 with an NPV of approximately $357,196.
• D)Alternative #2 with an NPV of approximately $380,561.

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Definitions:

Visual Perspicacity

The ability to observe and understand visual information with sharpness and clarity.

Optic Chiasma

The X-shaped structure formed by the crossing over of the optic nerves in the brain, which allows visual information from each eye to be processed on both sides of the brain.

Blind Spot

Area in the retina where the axons of the three layers of retinal cells exit the eye to form the optic nerve; insensitive to light.

Fovea

A small depression in the retina of the eye where visual acuity is highest, due to the high concentration of cones and absence of rods.