Project Delta has the following cash flows:CF 0 -$1,000,000CF 1 $100,000CF 2 $500,000CF 3 $500,000CF 4 $30,000If this project has a required rate of return of 22%,will management accept or reject the project?NPV @ r =22% = -$293,206 (rounded up)
A)Management would reject the project because the project has a NPV of $234,398.
B)Management would reject the project because the project has a NPV of -$293,206.
C)Management would reject the project because the project has a NPV of $293,206.
D)Management would reject the project because the project has a NPV of -$649,550.

Question

Quizplus · Accepted Answer

The NPV at the required rate of return of 22% is negative ($293,206), which means the project is not generating enough cash flows to cover the initial investment and earn the required rate of return. Therefore, management would reject the project.

Project Delta Has the Following Cash Flows:CF 0 -$1,000,000CF 1