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

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Definitions:

Mental Age

A measure of an individual's mental proficiency expressed in terms of the average age at which a normal individual reaches the same level of proficiency.

IQ

A measure of an individual's intellectual abilities in relation to others, often calculated through standardized tests.

Intelligence Acts

Refers to behaviors or actions that are carried out using cognitive skills such as reasoning, problem-solving, and understanding.

Indirectly

In a manner that is not directly caused by or not directly causing something, often involving one or more intermediate steps or agents.