Use the Information for the Question(s)below

question 82

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. At what discount rate does her decision to renovate become untenable?

• A)4.8%
• B)4.0%
• C)3.0%
• D)3.3%

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Definitions:

Sales Plan

A strategic document that outlines the business targets, tactics, and activities for a specific period of time, aimed at achieving sales goals.

Low Margin Products

Products that generate a minimal profit margin, often due to low selling prices and/or high costs of goods sold.

Profit Goal

A specific financial objective setting a desired net income or margin that a company or division aims to achieve.

Sales Target

A specified amount of sales that a company or salesperson aims to achieve within a set timeframe, serving as a benchmark for performance and objectives.