Should a Project Be Accepted If It Offers an Annual

question 99

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 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 zero.
• D) No, since NPV is negative.

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