1. A corporate financial analyst at a US-based multinational corporation created a 10-year NPV model for a proposed bicycle factory in Canada. The resulting NPV is -50 million (negative 50 million) CAD.

What should the analyst do?

a. Lower the discount rate, to increase the NPV

b. Increase the growth rate, to increase the NPV

c. Lower the Year 0 investment, to increase the NPV

d. Raise the Year 1 Cash Flow, to increase the NPV

e. Recommend that the factory not be built

f. Any of the above

g. None of the above

2. You are the seller of a business, negotiating with the buyer: The buyer is offering a purchase price of $500,000. The buyer calculated the NPV (business value) at $500,000, by forecasting future cash flows and applying a discount rate of 11%. In your negotiations, you agree with the future cash flow projections, but you want to receive a higher price.

What different discount rate will you suggest be used?

a. 12%

b. 10%

c. None of the above

3. A corporate financial analyst working in the Eurozone has created a 10-year NPV model, with a Discount Rate of 10%. The Terminal Value is calculated to be EUR 6,080 million

What is the Present Value of the Terminal Value?

a. EUR 2,131 million

b. EUR 2,344 million

c. EUR 15,770 million

d. EUR 17,347 million

e. None of the above