The NuPress Valet Co

question 32

Multiple Choice

The NuPress Valet Co. has an improved version of its' hotel stand. The investment cost is expected to be 72 million dollars and will return 13.50 million dollars for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%. What is the NPV of the project?

• A) - 4,500,000
• B) -24,517,378
• C) -19,489,708
• D) -20,123,870

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Definitions:

Altered Instrument

A legal term referring to a document, particularly a negotiable instrument, that has been illegally modified in a way that changes its original terms.

Collateral

Under Article 9 of the Uniform Commercial Code, the property subject to a security interest.

Impair

To weaken or damage something, especially a legal right, financial value, or physical condition.

FTC Rule 433

Known as the "Holder in Due Course" rule, it protects consumers entering into a credit transaction by preserving their right to assert claims against the seller, even when the debt is sold to a third party.