10- Assume that a company is considering opening a small store in İzmir. Thestore will cost 100 million TL to build, and the present value of the expected cashflows from the store is 120 million TL. Further assume that by opening this store,the company will have the chance to expand into a much larger store any timeover the next 5 years. The cost of expansion will be 200 million TL, and it will beundertaken only if the present value of the expected cash flows exceeds 200million TL. At the moment, the present value of the expected cash flows from theexpansion is believed to be only 150 million. The variance is 0.08, 5-year risk-freerate is 6%. What would be the strategic NPV?O 14.53 TLO 18.81 TL20.61 TLO 19.38 TLDiğer:

Answer: The correct answer is - ( b ) 18.81TL

Answered: 10- Assume that a company is…

10- Assume that a company is considering opening a small store in İzmir. The store will cost 100 million TL to build, and the present value of the expected cash

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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10- Assume that a company is considering opening a small store in İzmir. The store will cost 100 million TL to build, and the present value of the expected cash flows from the store is 120 million TL. Further assume that by opening this store, the company will have the chance to expand into a much larger store any time over the next 5 years. The cost of expansion will be 200 million TL, and it will be undertaken only if the present value of the expected cash flows exceeds 200 million TL. At the moment, the present value of the expected cash flows from the expansion is believed to be only 150 million. The variance is 0.08, 5-year risk-free rate is 6%. What would be the strategic NPV? O 14.53 TL O 18.81 TL 20.61 TL O 19.38 TL Diğer:
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