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sashaice [31]
3 years ago
12

A project that provides annual cash flows of $18,200 for nine years costs $88,000 today.

Business
1 answer:
Naddik [55]3 years ago
5 0

Answer:

a) the project should be accepted because its NPV is positive ($25,693.36)

b) if the required rate of return is 20%, the NPV = -$14,636.41

c) the project should be rejected because its NPV is negative

Explanation:

initial outlay year 0 -$88,000

cash flows years 1 - 9= $18,200

required rate of return = 8%

NPV = $25,693.36

required rate of return = 20%

NPV = -$14,636.41

the project's IRR = 14.63%

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