Harmony Industries uses the following table of risk-adjusted discount rates to analyze projects.

coefficient of variation . Discount rate

0-25......................................6%

.26-.50..................................8

.51-.75.................................10

.76-1.00...............................14

1.01-1.25............................20

The company is considering a $70,000 project. The coefficient of variation for the project is 0.847. Assume that the project generates the following cash flows:

Year cash flows

1...............$11,000

2.................16,000

3................21,000

4..................24,000

5..................30,000

Select the appropriate discount rate and compute the net present value. Should the project be undertaken?

Select one:

a. The project should not be undertaken because the NPV is -$2,987.

b. The project should be undertaken because the NPV is $1,870.

c. The project should be undertaken because the NPV is $3,457.

d. The project should not be undertaken because the NPV is -$4,096.