Dice, Inc Is Considering a Five-Year Project That Has an Initial

question 82

Multiple Choice

Dice, Inc. is considering a five-year project that has an initial after-tax outlay or after-tax cost of $70,000. The future after-tax cash inflows from its project for years 1, 2, 3, 4 and 5 are all the same at $35,000. Dice uses the net present value method and has a discount rate of 10%. Will Dice accept the project?

• A) Dice accepts the project because the NPV is about $69,455.
• B) Dice accepts the project because the NPV is about $62,678.
• C) Dice rejects the project because the NPV is about -$13,382.
• D) Dice rejects the project because the NPV is less than -$33,021.

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Definitions:

Real GDP

A measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the true value of goods and services produced in a given year.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar terms to remove the effect of inflation.

Per Capita Real GDP

An economic measure that divides the real gross domestic product by the total population, indicating the average economic output per person, adjusted for inflation.

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of goods and services produced in an economy in real terms.