Use the Information for the Question(s)below

question 33

Multiple Choice

Use the information for the question(s) below.
-The owner of a hair salon spends $1,000,000 to renovate its premises,estimating that this will increase her cash flow by $220,000 per year.She constructs the above graph,which shows the net present value (NPV) as a function of the discount rate.If her discount rate is 6%,should she accept the project?

• A)Yes,because the NPV is positive at that rate.
• B)No,because the NPV is negative at that rate.
• C)No,because the NPV is positive at that rate.
• D)Yes,because the NPV is negative at that rate.
• E)Cannot be determined from the information given.

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Definitions:

Socioeconomically

Refers to the social and economic factors and how they influence individuals and communities.

Reluctance

A hesitancy or unwillingness to take action or embark upon a specific course due to doubt or apprehension.

Evil Eye

A belief in many cultures that someone can cause misfortune or injury to another simply by looking at them with envy or ill intent.

Mystical Sources

References or origins attributed to supernatural or esoteric forces beyond the common understanding of reality.