The owners of a chain of fast-food restaurants spend $ 25 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%, were the owners correct in making the decision to install donut makers?

yes as it net present value is $24.17 million

Explanation:

In this question we have to find out the net present value which is shown below

              (In millions)                                            (In millions)

YearCash flowsDiscount rate 6%PV of cash inflows  

0            -$25                     1                          -$25  (A)

1              $10                  0.9434                   $9.43

2              $10                   0.8900                   $8.90

3               $10                   0.8396                   $8.40

4              $10                   0.7921                   $7.92

5             $10                    0.7473                   $7.47

6             $10                    0.7050                    $7.05

Present value                                       $49.17   (B)

Net present value                              $24.17  (A - B)

As we can see that the net present value comes in positive which means it generated the return in near future so the decision should be yes

107x106 is the answer

b.

c.

d.

g.

those r all of them i believe