(Ignore income taxes in this problem.) ABC Co. is considering an investment opportunity having cash flows as described below:

Project II would require cash outlays of $3,000 per year and would provide a cash inflow of $30,000 at the end of 8 years.

Required:

If ABC Co. has a required rate of return of 14%, determine if the project is acceptable. Use the NPV method.

A.

Not acceptable, because NPV is ($3,387)

B.

Yes acceptable, because NPV is $3,387

C.

It doesnt matter because NPV is $0

D.

Yes acceptable, because NPV is $10,530