Use the Table for the Question(s)below

question 86

Multiple Choice

Use the table for the question(s) below.
-Panjandrum Industries, a manufacturer of industrial piping, is evaluating whether it should expand into the sale of plastic fittings for home garden sprinkler systems. It has made the above estimates of free cash flows resulting from such a decision (all quantities in millions of dollars) . It is thought that if marketing expenses are increased by 40%, then revenues will rise. By how much will revenues have to rise for the net present value (NPV) of the project to increase?

• A)at least 2.9%
• B)at least 3.8%
• C)at least 2.0%
• D)at least 3.2%

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Positive Covenant

A clause in a loan agreement that requires the borrower to perform certain actions or meet specific conditions.

Loan Collateral

Assets or property that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

Coupon

The interest rate stated on a bond that represents the amount of interest the bondholder will receive.