A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0123 Cash Flow -$28,200 12,200 15,200 11,200
A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0123 Cash Flow -$28,200 12,200 15,200 11,200
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Just answer last question (what is npv for the project if the required rate of return is 26%)
Transcribed Image Text:A firm evaluates all of its projects by applying the NPV decision rule. A project under
consideration has the following cash flows:
Year
0123
Cash Flow
NPV
-$28,200
12,200
15,200
11,200
What is the NPV for the project if the required return is 10 percent? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
At a required return of 10 percent, should the firm accept this project?
Transcribed Image Text:At a required return of 10 percent, should the firm accept this project?
Yes
No
What is the NPV for the project if the required return is 26 percent? (A negative
answer should be indicated by a minus sign. Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
NPV
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Expert Solution
Step 1: Given:
Here,
| Year | Cash Flows |
| 0 | $ (28,200.00) |
| 1 | $ 12,200.00 |
| 2 | $ 15,200.00 |
| 3 | $ 11,200.00 |
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