The Quick-Start Company has the following pattern of potential cash
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The Quick-Start Company has the following pattern of potential cash

The Quick-Start Company has the following pattern of potential cash flows with its planned investment in a new cold weather starting system for fuel injected cars.   


33. If the company has a discount rate of 17%, what is the value closest to time 1 net present value? 

A. $ 48.6 million   B. $ 80.9 million   C. $108.2 million   D. $181.4 million   E. None of these.

34. If the company has a discount rate of 17%, should management decide to invest? 

A. yes, NPV = $ 2.2 million   B. yes, NPV = $ 21.6 million   C. no, NPV = $-1.9 million

D. yes, NPV = $ 8.6 million  E. No, since more than one branch is NPV = 0 or negative you must reject.

Hint
Accounts & FinanceNet present value (NPV) is the present value of the cash flows at the required rate of return of your project compared to your initial investment,” says Knight. In practical terms, it's a method of calculating your return on investment, or ROI, for a project or expenditure.  Calculating net present value involves calculating the cash flows for each period of the investme...
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