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A contract is estimated to yield net annual returns of $20 comma 000 for six years. To secure the contract, an immediate outlay of $90 comma 000 is required. Interest is 10% compounded annually.Calculate the net present value (NPV) of the contract and determine whether the project should be accepted or rejected according to the net present value criterion.Question content area bottom Part 1The net present value of the project is $enter your response here. ( Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)Part 2Should the project be accepted or rejected? The project should be Accepted or rejected? Use all nine digits and do not round the results

A contract is estimated to yield net annual returns of $20 comma 000 for six years. To secure the contract, an immediate outlay of $90 comma 000 is required. Interest is 10% compounded annually.Calculate the net present value (NPV) of the contract and determine whether the project should be accepted or rejected according to the net present value criterion.Question content area bottom Part 1The net present value of the project is $enter your response here. ( Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)Part 2Should the project be accepted or rejected? The project should be Accepted or rejected? Use all nine digits and do not round the results

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...
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A contract is estimated to yield net annual returns of $20 comma 000 for six years. To secure the contract, an immediate outlay of $90 comma 000 is required. Interest is 10% compounded annually.Calculate the net present value (NPV) of the contract and determine whether the project should be accepted or rejected according to the net present value criterion.Question content area bottom Part 1The net present value of the project is $enter your response here. ( Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)Part 2Should the project be accepted or rejected? The project should be Accepted or rejected? Use all nine digits and do not round the results
Transcribed Image Text:A contract is estimated to yield net annual returns of $20 comma 000 for six years. To secure the contract, an immediate outlay of $90 comma 000 is required. Interest is 10% compounded annually.Calculate the net present value (NPV) of the contract and determine whether the project should be accepted or rejected according to the net present value criterion.Question content area bottom Part 1The net present value of the project is $enter your response here. ( Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)Part 2Should the project be accepted or rejected? The project should be Accepted or rejected? Use all nine digits and do not round the results
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