Use the information for the question(s) below.
-The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. At what discount rate does her decision to renovate become untenable?
A) 3.0%
B) 3.3%
C) 4.0%
D) 4.8%

Question

Use the information for the question(s) below. 
-The owner of a hair salon spends $1,000,000 to renovate its premises, estimating that this will increase her cash flow by $220,000 per year. She constructs the above graph, which shows the net present value (NPV) as a function of the discount rate. At what discount rate does her decision to renovate become untenable?
A) 3.0% 
B) 3.3% 
C) 4.0% 
D) 4.8%

Quizplus · Accepted Answer

B) The point at which the graph cuts the Discount Rate axis

Use the Information for the Question(s) Below