The owners of a chain of fast-food restaurants spend $27 million installing donut makers in all their restaurants. This is expected to increase cash flows by $12 million per year for the next five years. If the discount rate is 6.5%, were the owners correct in making the decision to install donut makers? ..... O A. No, as it has a net present value (NPV) of - $5 million. O B. Yes, as it has a net present value (NPV) of $23 million. OC. No, as it has a net present value (NPV) of - $2 million. O D. Yes, as it has a net present value (NPV) of $14 million.

The owners of a chain of fast-food restaurants spend $27 million installing donut makers in all their restaurants. This is expected to increase cash flows by $12 million per year for the next five years. If the discount rate is 6.5%, were the owners correct in making the decision to install donut makers? ..... O A. No, as it has a net present value (NPV) of - $5 million. O B. Yes, as it has a net present value (NPV) of $23 million. OC. No, as it has a net present value (NPV) of - $2 million. O D. Yes, as it has a net present value (NPV) of $14 million.

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

Section: Chapter Questions

Problem 1PS

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The owners of a chain of fast-food restaurants spend $29 million installing donut makers in all their restaurants. This is expected to increase cash flows by $10 million per year for the next five years. If the discount rate is 6.2% were the owners correct in making the decision to install donut makers? O Yes, as it has a net present value (NPV) of $13 million. O No, as it has a net present value (NPV) of -$1 million. O No, as it has a net present value (NPV) of -$3 million. QYes, as it has a net present value (NPV) of $8 million.
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