Question

Sandstone, Inc. is considering a fourminusyear project that has an initial afterminustax outlay or afterminustax cost of​ $80,000. The future cash inflows from its project are​ $40,000, $40,000,​ $30,000 and​ $30,000 for years​ 1, 2, 3 and​ 4, respectively. Sandstone uses the net present value method and has a discount rate of​ 12%. Will Sandstone accept the​ project?a. Sandstone rejects the project because the NPV is less than-$4,000. b. Sandstone accepts the project because the NPV is greater than $30,000. c. Sandstone rejects the project because the NPV is-$3,021. d. Sandstone accepts the project because it has a positive NPV of over $28,000

Answer 1

Answer:

The correct answer is

d. Sandstone accepts the project because it has a positive NPV of over $28,000

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