Use the Information for the Question(s) Below

question 12

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. At what discount rate does her decision to renovate become untenable?

• A) 3.0%
• B) 3.3%
• C) 4.0%
• D) 4.8%

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Definitions:

Import

The act of bringing goods or services into a country from abroad for sale.

Export Restraints

Government-imposed limitations on the quantity or value of goods that can be exported from a country.

Trade Barriers

Measures imposed by governments to regulate or restrict international trade, including tariffs, quotas, embargoes, and standards.

Adverse Effects

Negative outcomes or damages that result from an action or policy.