Atlantic, Inc. is considering a project that is expected to produce the following cash flows over the next five years: $22,500, $27,900, $41,800, $33,000, and $15,000 respectively. Atlantic has $98,000 available, which is the amount needed to initiate the project. Should Atlantic accept this project if the required rate of return is 12%? Why or why not?
A) No; Atlantic would lose $2,407 in today's dollars if they accept the project.
B) No; The IRR is 13.47%, which is greater than the required return.
C) No; The PI is 1.04, which is considered a reject signal.
D) Yes; Atlantic will make $3,567 in today's dollars if they accept the project.
E) Yes; The PI is.96, which is considered an acceptance signal.

Question

Quizplus · Accepted Answer

The net present value (NPV) of the project is positive ($3,567), indicating that the project is expected to add value to the company and should be accepted.