A project requires an initial investment of $500,000. The following cash flows have been estimated for the life of the project: Year Cash flow ($) 1 120,000 2 150,000 3 180,000 4 160,000 a. The company uses NPV to appraise projects. Using a discount rate of 7%, calculate the NPV of the project and recommend whether the project should be undertaken.
A project requires an initial investment of $500,000. The following cash flows have been estimated for the life of the project: Year Cash flow ($) 1 120,000 2 150,000 3 180,000 4 160,000 a. The company uses NPV to appraise projects. Using a discount rate of 7%, calculate the NPV of the project and recommend whether the project should be undertaken.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A project requires an initial investment of $500,000. The following
estimated for the life of the project:
Year Cash flow ($)
1 120,000
2 150,000
3 180,000
4 160,000
a. The company uses NPV to appraise projects. Using a discount rate of 7%, calculate the NPV
of the project and recommend whether the project should be undertaken.
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