Suppose Your Firm Is Considering Investing in a Project with the Cash

question 69

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively. $$\begin{array} { l l l l l l l } \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000\end{array}$$ Use the NPV decision rule to evaluate this project; should it be accepted or rejected?

• A)$35,995.86, reject
• B)$38,875.53, accept
• C)$138,875.53, accept
• D)$238,875.53, accept

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A precious metal with high electrical and thermal conductivity, used in jewelry, silverware, and industrial applications.

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