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?
A) No,as it has a net present value (NPV) of -$2.25 million.
B) No,as it has a net present value (NPV) of-$1.68 million.
C) Yes,as it has a net present value (NPV) of $8.74 million.
D) Yes,as it has a net present value (NPV) of $13.56 million.
E) No,as it has a net present value (NPV) of-1.14 million.
Correct Answer:
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