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A project requires an intial investment of $100,000 (at t= 0) and is expected to generate cash flows of $50,000 per year for the next 5 years (t-1 to t= 5). The present value of the 5 positive cash flows is around $ 187,150. The firm has a cost of capital of 10.5 percent. Should this project be accepted, and why? Use the Pl technique. O PI-1.521, accept OPI-0.871, reject OPI-1.871, accept OPI-2,871, accept

A project requires an intial investment of $100,000 (at t= 0) and is expected to generate cash flows of $50,000 per year for the next 5 years (t-1 to t= 5). The present value of the 5 positive cash flows is around $ 187,150. The firm has a cost of capital of 10.5 percent. Should this project be accepted, and why? Use the Pl technique. O PI-1.521, accept OPI-0.871, reject OPI-1.871, accept OPI-2,871, accept

Essentials Of Investments
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
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Question 24 A project requires an intial investment of $100,000 (at t= 0) and is expected to generate cash flows of $50,000 per year for the next 5 years (t-1 to t = 5). The present value of the 5 positive cash flows is around $ 187,150. The firm has a cost of capital of 10.5 percent. Should this project be accepted, and why? Use the Pl technique. OPI-1.521, accept OPI-0.87 <1, reject OPI-1.871, accept OPI-2,871, accept
Transcribed Image Text:Question 24 A project requires an intial investment of $100,000 (at t= 0) and is expected to generate cash flows of $50,000 per year for the next 5 years (t-1 to t = 5). The present value of the 5 positive cash flows is around $ 187,150. The firm has a cost of capital of 10.5 percent. Should this project be accepted, and why? Use the Pl technique. OPI-1.521, accept OPI-0.87 <1, reject OPI-1.871, accept OPI-2,871, accept
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