Zinc Corp is planning to purchase new machinery. The initial cash outlay is expected to be $40,000 and the required return on investment is 9%. The cash flows for the next 3 years are $9,800, $11,720 and $9,640. Based on net present value (NPV) analysis, Zinc Corp should:
A. accept the project as the NPV is $14,500.
B. reject the project as the NPV is $(13,700.84).
C. accept the project as the NPV is (28,900.25).
D. reject the project as the NPV is 40,500.
E. accept the project as the NPV is $56,225.
Answer: B
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