Use the Table for the Question(s)below

question 82

Multiple Choice

Use the table for the question(s) below.

-Panjandrum Industries,a manufacturer of industrial piping,is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems.It has made the above estimates of free cash flows resulting from such a decision (all quantities in millions of dollars) .It is thought that if marketing expenses are increased by 40%,then revenues will rise.By how much will revenues have to rise for the net present value (NPV) of the project to increase?

• A)at least 2.0%
• B)at least 2.9%
• C)at least 3.2%
• D)at least 3.8%
• E)at least 4.1%

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Definitions:

Salvage Value

The anticipated remaining value of an asset once it has completed its functional lifespan, typically taken into account in computations of depreciation.

Natural Resources

Assets that come from the Earth and are used to produce goods and services, such as timber, oil, and minerals.

Units-of-Activity Method

The Units-of-Activity method is a depreciation approach based on the estimated usage, activity, or units produced over the asset's useful life, making depreciation expense directly proportional to its productivity.

Depreciated

The method of distributing the expense of a physical asset across its lifespan, indicating its diminishing value as time passes.