By Loosening Its Credit Standards,the Henry Company Believes Its Daily

question 12

Multiple Choice

By loosening its credit standards,the Henry Company believes its daily NPV will increase by $9,000.Henry uses a 10% cost of capital for credit policy decisions.If the increased daily NPV continues indefinitely,what is the aggregate NPV of the decision to lessen the credit standards? Assume a 365-day year.

• A)$3,285,000
• B)$9,000,000
• C)$19,328,500
• D)$32,850,000
• E)$46,985,000

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Definitions:

Greater Percentage

A proportion or share expressed as a fraction of 100 that is larger relative to a comparison figure or within a total.

Gross Investment

Total amount spent on new capital assets without deductions for depreciation.

Rose/Fell

Terms used to indicate an increase (rose) or a decrease (fell) in a numerical value or metric.

GDP

GDP measures the aggregate value of all goods and services made within the confines of a nation over a specified period.