Windy Burgers Is Trying to Determine When to Harvest a Herd

question 39

Multiple Choice

Windy Burgers is trying to determine when to harvest a herd of cows that it currently owns. If it harvests the herd in year 1, the NPV of the project would increase over an immediate harvest by 25 percent. A year 2 harvest would create an NPV increase of 15 percent over that of year 1 and year 3 would create an NPV increase of 7 percent over that of year 2. If the cost of capital is 12 percent for Windy, then which harvest year would maximize the NPV for the firm? Assume that all NPVs are calculated from the perspective of today.

• A) Harvest immediately.
• B) Harvest in year 1.
• C) Harvest in year 2.
• D) Harvest in year 3.

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Definitions:

Selection Techniques

Methods used by companies to identify and hire the most suitable candidates for a job position.

Physical Examination

A medical assessment typically involving a visual inspection, palpation, and other techniques to evaluate an individual's health.

Selection Process

The method by which individuals are screened and chosen to fill positions in organizations, often involving steps such as interviews and tests.

Fringe Benefit Programs

Employer-provided supplements to an employee's salary, such as health insurance, retirement plans, and paid vacations, which offer additional value.