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. Questions 14 - 19 are all based on the following information. Reggie Redbird, the CEO of Sullivan Slicers, Inc. believes that the firm could
. Questions 14 - 19 are all based on the following information. Reggie Redbird, the CEO of Sullivan Slicers, Inc. believes that the firm could create additional value by adding snippers to its product mix. Machinery used in producing the snippers would cost $9,250,000. According to Redbird's projections, the subsequent net cash flows the company would generate for the investors if it entered the snipper business would be $1,150,000 per year for 14 years. These are the only cash flows expected. The firm's annual weighted average cost of capital for a project of this type is 7.8%. QUESTION: What would the snipper project's NET PRESENT VALUE (NPV) be if the annual COST OF CAPITAL WERE ZERO PERCENT (0%) instead of 8.4%? A. $578,571.43 B. $6,850,000.00 C. $9,592,008.12 D. $0 E. - $9,250,000.00
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