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Determine if the project is acceptable

    Assignment Instructions

    Assignment ID: FG132931932

    ABC Co. is considering an investment opportunity having cash flows as described below:

    Project II would require cash outlays of $3,000 per year and would provide a cash inflow of $30,000 at the end of 8 years.

    Required:

    Problem 1: If ABC Co. has a required rate of return of 14%, determine if the project is acceptable. Use the NPV method.

    A. Not acceptable, because NPV is ($3,387)
    B. Yes acceptable, because NPV is $3,387
    C. It doesn’t matter because NPV is $0
    D. Yes acceptable, because NPV is $10,530

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