Suppose a Six-Year Project Requires an Initial Capital Investment of $425,000

question 27

Multiple Choice

Suppose a six-year project requires an initial capital investment of $425,000 and an initial net working capital investment of $50,000.The project is expected to provide operating revenue of $270,000 per year.The associated operating costs are expected to be $130,000 per year.The capital asset belongs to Class 9 and has a CCA rate of 30 percent.The asset is expected to sell for $40,000 when the project terminates.Assume the asset class remains open when the asset is sold.The firm's marginal tax rate is 40 percent and cost of capital is 8 percent.What impact would it have on the project's NPV if the cost of capital were 10 percent?

• A) NPV decreases by 23.14%
• B) NPV decreases by 38.04%
• C) NPV decreases by 48.20%
• D) NPV decreases by 61.41%

Comprehend how no-action conditions and default choices influence consumer decision-making.

Understand the psychological effects of limited availability and promotional tactics on consumer behavior.

Recognize the importance of quick and effective complaint resolution to minimize negative consumer feedback.

Understand the significance of personal interaction and relationship-building in customer retention and positive word-of-mouth.

---

Definitions:

Corporate Culture

The shared values, beliefs, attitudes, and practices that characterize an organization and guide its employees’ behavior.

Cultural Relativism

The belief that there is no one right way to behave; ethical behaviour is determined by its cultural context.

Ethical Standards

Principles that govern the conduct of individuals and organizations, ensuring actions are morally right and in accordance with accepted social norms.

Cultural Context

Pertains to the environmental and social factors that influence the values, behaviors, practices, and communication of individuals or groups.