Generro Company is considering the purchase of equipment that would cost $55,000 and offer annual cash inflows of $15,000 over its useful life of 5 years. Assuming a desired rate of return of 10%, is the project acceptable? (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)

Multiple Choice

• Yes, since the investment will generate $75,000 in future cash flows, which is greater than the purchase cost of $55,000.

• Yes, since the positive net present value indicates the investment will earn a rate of return greater than 10%.

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

• The answer cannot be determined.