Generro Company is considering the purchase of equipment that would cost $36,000 and offer annual cash inflows of $10,500 over its useful life of 5 years. Assuming a desired rate of return of 12%, is the project acceptable?

Question 7 options:

1)	No, since the negative net present value indicates the investment will yield a rate of return below the desired rate of return.

2)	Yes, since the investment will generate $52,500 in future cash flows, which is greater than the purchase cost of $36,000.

3)	Yes, since the positive net present value indicates the investment will earn a rate of return greater than 12%.

4)	The answer cannot be determined.