Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: Cash flow: 0 -$242,000 $66,500 2 $84,700 3 $141,700 $122,700 5 $81,900 Use the NPV decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. NPV Should it be accepted or rejected? Accepted
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3.0 and 3.5 years, respectively. Time: Cash flow: 0 -$242,000 $66,500 2 $84,700 3 $141,700 $122,700 5 $81,900 Use the NPV decision rule to evaluate this project. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. NPV Should it be accepted or rejected? Accepted
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 20P
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