Use the following information to answer questions 10-12.
General Candy, Inc., a U.S. firm, manufactures and sells candies worldwide. Because of a rising price of sugar in the U.S., the company is considering to build a new plant in the U.K. The plant will cost £15 million to build. Assume that the plant will have a life of 3 years before it is confiscated by the British government zero salvage value and the discount rate of the cash flows is 10%. Consider the following cash flows for this project.
Table 9.1:

-Refer to Table 9.1.Based on the net present value,
A) the project can be accepted because the net present value is positive.
B) the project should be rejected because the net present value is negative.
C) the project can be accepted because the net present value is negative.
D) the project should be rejected because the net present value is positive.

Question

Use the following information to answer questions 10-12.
General Candy, Inc., a U.S. firm, manufactures and sells candies worldwide. Because of a rising price of sugar in the U.S., the company is considering to build a new plant in the U.K. The plant will cost £15 million to build. Assume that the plant will have a life of 3 years before it is confiscated by the British government zero salvage value and the discount rate of the cash flows is 10%. Consider the following cash flows for this project.
Table 9.1:
 
-Refer to Table 9.1.Based on the net present value,
A) the project can be accepted because the net present value is positive. 
B) the project should be rejected because the net present value is negative. 
C) the project can be accepted because the net present value is negative. 
D) the project should be rejected because the net present value is positive.

Quizplus · Accepted Answer

The net present value (NPV) method is used to evaluate the profitability of a project. A positive NPV indicates that the project's returns exceed its costs, making it financially viable and acceptable. Therefore, if the NPV is positive, the project can be accepted.

Use the Following Information to Answer Questions 10-12