Should a Project Be Accepted If It Offers an Annual

question 59

Multiple Choice

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

• A) Yes, since the project's NPV is positive.
• B) Yes, since a zero NPV indicates marginal acceptability.
• C) No, since the project's NPV is zero.
• D)No, since the project's NPV is negative.

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