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barmour44 barmour44
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4 years ago
The owners of a chain of fast-food restaurants spend $28 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 6.5%, were the owners correct in making the decision to install donut makers?

▸ Yes, as it has a net present value (NPV) of $8.74 million.

▸ No, as it has a net present value (NPV) of -$2.25 million.

▸ Yes, as it has a net present value (NPV) of $13.56 million.

▸ No, as it has a net present value (NPV) of-1.68 million.
Textbook 
Fundamentals of Corporate Finance

Fundamentals of Corporate Finance


Edition: 2nd
Authors:
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zachcarytcriszachcarytcris
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4 years ago
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barmour44 Author
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4 years ago
Thanks
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