Suppose You Are Looking to Add More Capacity to Your

question 37

Multiple Choice

Suppose you are looking to add more capacity to your current manufacturing plant.The new project will cost $6 million up front and is projected to increase revenue $1.5 million a year for each of the next 5 years.If the interest rate is 8%,what is this project's NPV and is it a profitable investment?

• A) -$10,934.94, Yes it is profitable
• B) -$10,934.94, No it is not profitable
• C) $944,444.44, Yes it is profitable
• D) $944,444.44, No it is not profitable

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Definitions:

Abram Maslow

An American psychologist best known for creating Maslow's hierarchy of needs, a theory in psychology that prioritizes human needs into five levels.

Needs Hierarchy

A theory of human motivation that categorizes needs into a hierarchical levels, from basic physiological needs to self-actualization needs.

Employee Motivation

The level of energy, commitment, and creativity that a company's workers bring to their jobs.

Pay Satisfaction

The level of contentment employees feel about their compensation, considering factors like fairness, adequacy, and comparison to others.