Washington Industries Inc

question 22

Multiple Choice

Washington Industries Inc.is considering a project that has an initial after-tax outlay or after-tax cost of $350,000.The respective future cash inflows from its five-year project for years 1 through 5 are $75,000 each year.Washington expects an additional cash flow of $50,000 in the fifth year.The firm uses the net present value method and has a discount rate of 10%.Will Washington accept the project?

• A)Washington accepts the project because it has an NPV greater than $5,000.
• B)Washington rejects the project because it has an NPV less than $0.
• C)Washington accepts the project because it has an NPV greater than $18,000.
• D)There is not enough information to make a decision.

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Definitions:

Age-related

Pertaining to changes or developments that occur as a part of the aging process.

Stress

A physical or psychological response to internal or external pressures, perceived as challenging or threatening to an individual's well-being.

Physically

Relating to the body as opposed to the mind or spirit.

Psychologically

Pertaining to the mind or mental processes and how they influence behavior and well-being.