A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year 0 1 2 WN 3 NPV Cash Flow What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) -$ 29,000 13,000 16,000 12,000 At a required return of 12 percent, should the firm accept this project? NPV Yes O No What is the NPV for the project if the required return is 24 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.)

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
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A firm evaluates all of its projects by applying the NPV decision rule. A project under
consideration has the following cash flows:
Year
0
1
2
WN
3
NPV
Cash Flow
What is the NPV for the project if the required return is 12 percent? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
-$ 29,000
13,000
16,000
12,000
At a required return of 12 percent, should the firm accept this project?
NPV
Yes
O No
What is the NPV for the project if the required return is 24 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.)
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 0 1 2 WN 3 NPV Cash Flow What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) -$ 29,000 13,000 16,000 12,000 At a required return of 12 percent, should the firm accept this project? NPV Yes O No What is the NPV for the project if the required return is 24 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.)
Expert Solution
Step 1

Net present value method is a method for calculating the total additional value in the company due to acceptance of a project and it is considered the best capital budgeting method.

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