Meyer,IncIs Considering a Five-Year Project That Has an Initial After-Tax

question 10

Multiple Choice

Meyer,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.Meyer uses the net present value method and has a discount rate of 10%.Will Meyer accept the project?

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

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