The Owner of a Number of Gas Stations Is Considering

question 3

Multiple Choice

The owner of a number of gas stations is considering installing coffee machines in his gas stations. It will cost $260,000 to install the coffee machines, and they are expected to boost cash flows by $111,428 per year for their five-year working life. What must the cost of capital be if this investment has a profitability index of 1?

• A) 1.17%
• B) 2.34%
• C) 4.69%
• D) 5.86%

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Definitions:

Cerebellum

A part of the brain located at the back of the skull, primarily responsible for coordinating movement and balance.

Cathartic Method

A therapeutic technique that involves the expressing or releasing of repressed emotions and impulses to relieve psychological tension.

Anesthesia Therapy

The use of drugs to induce a state of temporary loss of sensation or awareness, typically used during surgical procedures to ensure patient comfort.

Mesmer

An 18th-century physician known for developing a theory of animal magnetism and for his contribution to the field we now call hypnotism.