A chain of take-away pizza stores is considering introducing a new line of gluten-free pizzas.  Net revenue from the new line of pizzas is expected to total $400,000 per year, but 20% of this net revenue is forecast to consist of people switching from the regular pizzas to the gluten-free pizzas. How would you describe this situation in terms of the NPV analysis upon which the situation will be based. a. There is a negative externality equal to $80,000 which should be included in the NPV analysis for the gluten-free pizza project. b. There is a positive externality equal to $80,000 which should be included in the NPV analysis for the gluten-free pizza project. c. There is a negative externality equal to $320,000 which should be included in the NPV analysis for the gluten-free pizza project. d. There is a positive externality equal to $320,000 which should be included in the NPV analysis for the gluten-free pizza project.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A chain of take-away pizza stores is considering introducing a new line of gluten-free pizzas.  Net revenue from the new line of pizzas is expected to total $400,000 per year, but 20% of this net revenue is forecast to consist of people switching from the regular pizzas to the gluten-free pizzas.

How would you describe this situation in terms of the NPV analysis upon which the situation will be based.

a.
There is a negative externality equal to $80,000 which should be included in the NPV analysis for the gluten-free pizza project.
b.
There is a positive externality equal to $80,000 which should be included in the NPV analysis for the gluten-free pizza project.
c.
There is a negative externality equal to $320,000 which should be included in the NPV analysis for the gluten-free pizza project.
d.
There is a positive externality equal to $320,000 which should be included in the NPV analysis for the gluten-free pizza project.
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