SAP IncReceived a $1 Million Grant Under Its Small Business Innovation

question 36

Multiple Choice

SAP Inc.received a $1 million grant under its Small Business Innovation program.SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards.The firm estimates that each shipyard spends $500,000 a year on storm water clean-up efforts.If SAP is able to sign up and retain four shipyards from the first year onwards,what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 18% per year? Assume a cost of operations and other costs for SAP equal 50% of revenue.

• A)$4.56 million
• B)$4.98 million
• C)$5.32 million
• D)$5.87 million
• E)$6.12 million

---

Definitions:

Inspection Phase

The initial part of a physical examination where a healthcare provider visually examines a patient for any signs of abnormality.

Palpation

The act of examining part of the body by touch, especially for the purpose of diagnosing disease or illness.

Percussing

A method in medical examinations where the surface of the body is tapped lightly to evaluate the condition of the organs underneath.

Abdominal Musculature

Refers to the muscles found in the abdomen area, responsible for posture, movement, and the protection of internal organs.