Dr Yuan Opens a Lab

Dr. Yuan opens a lab. The lab has an initial cost of $100,000. Expected net cash flow is $24,000 in the first year, growing by 15% per year. Net cash flow is revenue less expenses. Assume the lab has a 6 year life and there is no scrap value for the lab.
-Assume instead that Dr. Yuan forms a partnership with Dr. Bhat. They agree to share the $100,000 cost equally and to share the cash flow equally. Because of efficiency gains from longer operating hours, they expect the cash flow to be $32,000 per year. Now assume they expect net cash flow to grow only at 10% per year. Please compare the results to the original scenario described in question 13 (Dr. Yan opening the only lab in the area) .

A) The NPV decreases, but is still positive. Dr. Yuan can still expect a positive return on her investment.
B) The NPV decreases, and becomes negative. Dr. Yuan should expect a loss on this investment.
C) The IRR decreases, but is still positive. Dr. Yuan can still expect a positive return on her investment.
D) The IRR and the NPV increase. Dr. Yuan can expect a positive return on her investment.
E) The IRR and the NPV decrease. Dr. Yuan should expect a negative return on her investment.