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Determine if the project is acceptable

   

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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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