An investment has an installed cost of $534,800. The cash flows over the four-year life of the investment are projected to be $2
1 answer:
<u>Solution and Explanation:</u>
(a)-<u>NPV if the Discount Rate is Zero </u>
If the Discount Rate is Zero, the NPV of the Project is the sum of the Future cash flows deducted by Initial Investment
Net Present Value (NPV)
= $256,430
If the Discount Rate is Zero, The NPV will be $256,430”
(b)-<u> NPV If the discount rate is infinite </u>
If the Discount Rate is Infinite, the NPV of the Project is the Initial Investment
NPV = -$534,800 (Negative)
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