You are analyzing a project and have prepared the following data: $$\begin{array} { | l | l | }
\hline \text { Year } & \text { Cad Flow } \
\hline 0 & -£ 169,000 \
\hline 1 & £ 46,200 \
\hline 2 & £ 87,300 \
\hline 3 & £41,000 \
\hline 4 & £ 39,000 \
\hline
\end{array}$$ Required payback period: 2.5 years
Required AAR: 7.25%
Required return: 8.50%
Based on the net present value of _____for this project,you should _____ the project.
A)-£2,021.28; reject
B)-£406.19; reject
C)£7,978.72; accept
D)£9,836.74; accept
E)£12,684.23; accept

Question

You are analyzing a project and have prepared the following data: $$\begin{array} { | l | l | } 
\hline \text { Year } & \text { Cad Flow } \
\hline 0 & -£ 169,000 \
\hline 1 & £ 46,200 \
\hline 2 & £ 87,300 \
\hline 3 & £41,000 \
\hline 4 & £ 39,000 \
\hline
\end{array}$$ Required payback period: 2.5 years
Required AAR: 7.25%
Required return: 8.50%
Based on the net present value of _____for this project,you should _____ the project.
A)-£2,021.28; reject
B)-£406.19; reject
C)£7,978.72; accept
D)£9,836.74; accept
E)£12,684.23; accept

Quizplus · Accepted Answer

The net present value of the project is £7,978.72, which is positive. This means that the project is expected to generate a positive return, and therefore should be accepted.

You Are Analyzing a Project and Have Prepared the Following