Use the Information for the Question(s)below

question 104

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

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Definitions:

Economy

The comprehensive system of production, distribution, and consumption of goods and services within a society.

Organic Farm

A farming system that utilizes natural processes and inputs for crop and livestock production, avoiding synthetic chemicals and genetically modified organisms.

Farmers' Market

A designated market space where local farmers and vendors sell their produce and goods directly to consumers.

Global Markets

The international exchange of goods, services, and finances, characterized by global competition, pricing, and product availability.