Should a Project Be Accepted If It Offers an Annual

question 88

Multiple Choice

Should a project be accepted if it offers an annual after-tax cash flow of $1,250,000indefinitely, costs $10 million, is riskier than the firm's average projects, and the firm uses a 12.5% WACC?

• A)Yes, since NPV is positive.
• B)Yes, since a zero NPV indicates marginal acceptability.
• C)No, since NPV is greater than zero.
• D)No, since NPV is negative.

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