Question
Gerry, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $220,000. The respective future cash inflows from this 4
Gerry, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $220,000. The respective future cash inflows from this 4 year project for years 1 through 4 are: $50,000, $60,000, $70,000, and 80,000 respectively. Gerry, Inc. uses the net present value method and has a discount rate of 11%, will Gerry, Inc accept the project?
A) Gerry rejects the project because the NPV is about -$2375.60
B) Gerry rejects the project because the NPV is about -$12,375.60
C) Gerry rejects the project because the NPV is about -$22,375.73
D) Gerry accepts the project because the NPV is greater than $10,000.00
Please provide detailed solution with the answer.
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