Rogue River,Inc

question 87

Multiple Choice

Rogue River,Inc.is considering a project that has an initial after-tax outlay or after-tax cost of $220,000.The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000,$60,000,$70,000 and $80,000.Rogue River uses the net present value method and has a discount rate of 11%.Will Rogue River accept the project?

• A)Rogue River accepts the project because the NPV is greater than $10,000.00.
• B)Rogue River rejects the project because the NPV is about -$22,375.73.
• C)Rogue River rejects the project because the NPV is about -$12,375.60.
• D)Rogue River rejects the project because the NPV is about -$2,375.60.

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Definitions:

Negative Amount

A value less than zero, indicating a deficit or loss in a numeric context.

Linear Model

A type of statistical model that assumes a linear relationship between one or more independent variables and a dependent variable, represented by a straight line in a two-dimensional plane.

Regression Analysis

A statistical technique used to examine the relationship between a dependent variable and one or more independent variables.

Y-Intercept

The point at which a line crosses the y-axis on a graph, representing the value of y when x equals zero.