Chapter 10, Problem 9SP

(NPV with varying required rates of return) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $5 million and would generate annual free cash inflows of $1 million per year for 8 years. Calculate the project’s NPV given:

1. a. A required rate of return of 9 percent
2. b. A required rate of return of 11 percent
3. c. A required rate of return of 13 percent
4. d. A required rate of return of 15 percent