Fox, Inc Is Considering a Five-Year Project That Has Initial After-Tax

question 92

Multiple Choice

Fox, Inc. is considering a five-year project that has initial after-tax outlay or after-tax cost of $170,000. The future after-tax cash inflows from its project for years 1 through 5 are $45,000 for each year. Fox uses the net present value method and has a discount rate of 11.25%. Will Fox accept the project?

• A) Fox accepts the project because the NPV is about $5,455.
• B) Fox accepts the project because the NPV is about $165,275.
• C) Fox rejects the project because the NPV is about -$4,725.
• D) Fox rejects the project because the NPV is about -$154,725.

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