An entrepreneur is offered a service contract that will cost him $600,000 initially. The contract has a 5 years of life and will generate an after tax cash inflow of $150,000 per year. The cost of capital of this project is 13%. What’s the NPV of the project? Should the entrepreneur accept the contract? Group of answer choices -$72,415; reject $89,569; accept $72,415; accept -$70,179; reject $527,585; reject
An entrepreneur is offered a service contract that will cost him $600,000 initially. The contract has a 5 years of life and will generate an after tax cash inflow of $150,000 per year. The cost of capital of this project is 13%. What’s the NPV of the project? Should the entrepreneur accept the contract? Group of answer choices -$72,415; reject $89,569; accept $72,415; accept -$70,179; reject $527,585; reject
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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An entrepreneur is offered a service contract that will cost him $600,000 initially. The contract has a 5 years of life and will generate an after tax cash inflow of $150,000 per year. The cost of capital of this project is 13%. What’s the NPV of the project? Should the entrepreneur accept the contract?
Group of answer choices
-$72,415; reject
$89,569; accept
$72,415; accept
-$70,179; reject
$527,585; reject
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