Jazz World Inc

question 59

Multiple Choice

Jazz World Inc.is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that a project's projected NPV can be negative,in which case it will be rejected.

• A) 0$222.13
• B) 0$185.11
• C) 0$157.34
• D) 0$174.00
• E) 0$198.07

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Definitions:

Diversified Away

The risk that can be reduced or eliminated in a portfolio through investments in a variety of assets, thus not tied to the performance of a single investment.

Market Risk

The risk of losses in positions arising from movements in market prices.

Firm-specific Risk

The portion of an asset's risk that is attributable to the company's individual factors, uncorrelated with general market movements.

Nonsystematic Risk

The part of an investment's risk that is specific to the investment, unrelated to the market's overall movements.