Use the information for the question(s) below. NPV 150000 100000 50000 0 -50000 -100000 -150000 -200000 1 2 3 又 5 6 7 8 9 10 Discount Rate The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. If her discount rate is 6%, should she accept the project? A. No, because the NPV is positive at that rate. B. Yes, because the NPV is positive at that rate. C. No, because the NPV is negative at that rate. D. Cannot be determined from the information given.
Use the information for the question(s) below. NPV 150000 100000 50000 0 -50000 -100000 -150000 -200000 1 2 3 又 5 6 7 8 9 10 Discount Rate The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. If her discount rate is 6%, should she accept the project? A. No, because the NPV is positive at that rate. B. Yes, because the NPV is positive at that rate. C. No, because the NPV is negative at that rate. D. Cannot be determined from the information given.
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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Transcribed Image Text:Use the information for the question(s) below.
NPV
150000
100000
50000
0 T T
-50000
-100000
-150000
-200000
1
-2
3
*
-5
6
7
- 8
9 10
Discount Rate
The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per
year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. If her discount rate
is 6%, should she accept the project?
A. No, because the NPV is positive at that rate.
B. Yes, because the NPV is positive at that rate.
C. No, because the NPV is negative at that rate.
D. Cannot be determined from the information given.
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