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XYZ is considering undertaking the pear project, which is a 3-year project with expected cash flows that are not conventional. Cash flows are expected to

XYZ is considering undertaking the pear project, which is a 3-year project with expected cash flows that are not conventional. Cash flows are expected to be $22,000 today, $37,000 in 1 year, $52,000 in 2 years, and $61,000 in 3 years. The weighted-average cost of capital for XYZ is 16.54 percent. Which one of the following assertions about the net present value (NPV) of the pear project is true?

a.

The NPV of the pear project equals an amount that is less than or equal to $5.00

b.

The NPV of the pear project equals an amount that is greater than $5.00 but less than $5.00

c.

Even though the pear projects expected cash flows are not conventional and even though it is possible to compute the NPV of a project with expected cash flows that are not conventional, the NPV of the pear project can not be computed

d.

The NPV of the pear project equals an amount that is equal to or greater than $5.00

e.

The NPV of the pear project cannot be computed, because the projects expected cash flows are not conventional and it is impossible to compute the NPV of a project with expected cash flows that are not conventional

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