Consider a capital expenditure project to purchase and install new equipment with an initial cash outlay of $35,000.he project is expected to generate and that after tax cash flow’s each year of $5000 for 10 years and at the end of the project at one time after tax cash flow of $11,000 is expected. the firm has a weighted average cost of capital of 7.5% and requires a four year pay back on products of this type determine whether this project should be excepted or rejected using NPV.
a. Accept since NPV is $74,657.54 and is greater than zero
b. Reject since NPV is -$74,657.54 and is less than zero
c. Accept NPV is equal to $39,657.54 and is greater than zero
d. Accept since NPV is $4,657.54 and is greater than zero
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