SAP Inc Received a $1

question 13

Multiple Choice

SAP Inc. received a $1.5 million grant under its Small Business Innovation program. SAP invested the grant money and developed a system to remove metal contaminants from storm water in shipyards. The firm estimates that each shipyard spends $500,000 a year on storm water clean-up efforts. If SAP is able to sign up and retain four shipyards in the first year onwards, what is the present value (PV) of the project (net of investment) if the cost of capital for SAP is 14% per year? Assume a cost of operations and other costs for SAP equal 50% of revenue.

• A) $4.51 million
• B) $4.80 million
• C) $5.93 million
• D) $5.64 million

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Definitions:

Articles of Confederation

The first written constitution of the United States, in effect from 1781 to 1789, before being replaced by the current U.S. Constitution.

Military Quotas

Predetermined numbers or percentages dictating the recruitment, promotion, or inclusion of individuals within the military, which can encompass various criteria, such as nationality, ethnicity, or gender.

Interstate Commerce

Trade, traffic, or transportation involving the exchange of goods, services, or persons between states.

Declaration of Independence

A fundamental document that declared the thirteen American colonies independent from British rule in 1776.