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

5.9%,

were the owners correct in making the decision to install donut makers?

A.

Yes, as it has a net present value (NPV) of

$9

million.

B.

Yes, as it has a net present value (NPV) of

$14

million.

C.

No, as it has a net present value (NPV) of

$1

million.

D.

No, as it has a net present value (NPV) of

$3

million.