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.