ADMS 2510 Lecture 13: ch13.pdf
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27 Feb 2015
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High-Top, Inc. is considering a four-year project that has an initial after-tax outlay cost of $120,000. The future cash inflows from its project are $25,000, $30,000, $35,000 and $32,000 for years 1, 2, 3 and 4, respectively. High-Top uses the net present value method and has a discount rate of 12%. Will the company accept the project?
High-Top rejects the project because the NPV is greater than -$28,000. | ||
| High-Top rejects the project because the NPV is -$3,021. | |
| High-Top accepts the project because the NPV is greater than $15,000. | |
| High-Top accepts the project because the NPV is greater than $28,000 |