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Section For each of the following, please pick the best answer 1 The owners of a chain of fast-food restaurants spend $28 million installing donut
Section For each of the following, please pick the best answer 1 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? b. No, as it has a net present value (NPV) of $1.68 million. a. No, as it has a net present value (NPV) of -$2.25 million. d. Yes, as it has a net present value (NPV) of $13.56 million. 2. The acceptance of an investment project implies that: I. II. III. LS APR is greater than a certain threshold (i.e. required rate of return) its NPV is greater than its IRR. its NPV is greater than or equal to 0. a. I only b. II only c. I and III only d. I and II only
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