Dweller, Inc. is considering a four-year project that has an initial after-tax o

Question

Dweller, Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $80,000. The future cash inflows from its project are $40,000, $40,000, $30,000 and $30,000 for years 1, 2, 3 and 4, respectively. Dweller uses the net present value method and has a discount rate of 12%. Will Dweller accept the project?

A) Dweller rejects the project because the NPV is -$3,021.

B) Dweller accepts the project because the NPV is greater than $28,000.

C) Dweller rejects the project because the NPV is less than -$4,000.

D) Dweller accepts the project because the NPV is greater than $30,000.

Explanation / Answer

D) Dweller accepts the project because the NPV is greater than $30,000.

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