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Ilia_Sergeevich [38]
3 years ago
5

Lucie is reviewing a project with an initial cost of $38,700 and cash inflows of $9,800, $16,400, and $21,700 for Years 1 to 3,

respectively. Should the project be accepted if it has been assigned a required return of 9.75 percent
Business
1 answer:
Alecsey [184]3 years ago
5 0

Answer:

Results are below.

Explanation:

To determine whether the project should be accepted or not, we need to calculate the net present value. <u>If the NPV is positive, the project should be accepted.</u>

<u>To calculate the NPV, we will use the following formula:</u>

NPV= -Io + ∑[Cf/(1+i)^n]

Cf1= 9,800/1.0975= 8,929.38

Cf2= 16,400/1.0975^2= 13,615.54

Cf3= 21,700/1.0975^3= 16,415.20

Total= $38,960.12

NPV= -38,700 + 38,960.12

NPV= 260.12

<u>The project is profitable. </u>

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Answer:

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Answer:

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2. March 31

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