Dice, Inc. is considering a five-year project that has an initial after-tax outlay or after-tax cost of $70,000. The future after-tax cash inflows from its project for years 1, 2, 3, 4 and 5 are all the same at $35,000. Dice uses the net present value method and has a discount rate of 10%. Will Dice accept the project?
A) Dice accepts the project because the NPV is about $69,455.
B) Dice accepts the project because the NPV is about $62,678.
C) Dice rejects the project because the NPV is about -$13,382.
D) Dice rejects the project because the NPV is less than -$33,021.

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the future cash inflows at the given discount rate and subtracting the initial outlay. The NPV is positive, indicating the project is acceptable.

Dice, Inc Is Considering a Five-Year Project That Has an Initial