Use the Information for the Question(s)below

question 62

Multiple Choice

Use the information for the question(s) below.
Epiphany Industries is considering a new capital budgeting project that will last for three years.Epiphany plans on using a cost of capital of 12% to evaluate this project.Based on extensive research,it has prepared the following incremental cash flow projections:
-Epiphany would like to know how sensitive the project's NPV is to changes in the discount rate.How much can the discount rate vary before the NPV reaches zero?

• A)7.14%
• B)19.14%
• C)12.0%
• D)0%

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Definitions:

Saddles Imported

The act of bringing in saddles from foreign countries for sale within the domestic market.

Quantity

The amount or number of a material or immaterial good or service.

Tariff

A tax imposed by a government on imported goods, often used to protect domestic industries and adjust trade balances.

Carnations

A species of flowering plant in the Dianthus genus, often used in bouquets and floral arrangements.