A Project Requires an Investment of $10 Million and Offers

question 60

Multiple Choice

A project requires an investment of $10 million and offers an annual after-tax cash flow of $1,250,000 indefinitely.If the firm's WACC is 12.5% and the project is riskier than the firm's average projects,should it be accepted%?

• 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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