Use the Information for the Question(s)below

question 42

Multiple Choice

Use the information for the question(s) below.
Temporary Housing Services (THS) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a cyclone. THS will lease space in this facility to various agencies and groups providing relief services to the area. THS estimates that this project will initially cost $6 million to set up and will generate $22 million in revenues during its first and only year of operation (paid in one year) . Operating expenses are expected to total $13 million during this year and depreciation expense will be another $4 million. THS will require no working capital for this investment. THS's marginal tax rate is 30%.
-Assume that THS's cost of capital for this project is 15%. The net present value (NPV) of this temporary housing project is closest to:

• A)-$435 000
• B)$520 000
• C)$1 960 000
• D)-$650 000

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Definitions:

Minority Opinion

A viewpoint or perspective that is held by a smaller segment of the population, often differing from the majority view.

Automatic Process

Cognitive operations that occur without conscious awareness or effort, often enabling quick responses and multitasking.

Conversion Theory

A psychological theory that suggests people's attitudes can change under certain conditions without them being aware of those changes.

Distinctive Position

A unique or notable situation or status within a particular context or environment.