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Use the Table for the Question(s)below

Question 97

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Use the table for the question(s) below.
Use the table for the question(s) below.    -Visby Rides,a livery car company,is considering buying some new luxury cars.After extensive research,they come up with the above estimates of free cash flow from this project.Visby learns that a competitor is thinking of offering similar services,thus reducing Visby's sales.By how much could sales fall before the net present value (NPV) was zero,given that the cost of capital is 10%,and that cost of goods sold is 35% of revenues? A) by 12% B) by 18% C) by 24% D) by 22% E) by 31%
-Visby Rides,a livery car company,is considering buying some new luxury cars.After extensive research,they come up with the above estimates of free cash flow from this project.Visby learns that a competitor is thinking of offering similar services,thus reducing Visby's sales.By how much could sales fall before the net present value (NPV) was zero,given that the cost of capital is 10%,and that cost of goods sold is 35% of revenues?


A) by 12%
B) by 18%
C) by 24%
D) by 22%
E) by 31%

Correct Answer:

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