A project that provides annual cash flows of $18,200 for nine years costs $88,00

Question

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

What is the NPV for the project if the required return is 8 percent? (Round your answer to 2 decimal places. (e.g., 32.16))

At a required return of 8 percent, should the firm accept this project?

What is the NPV for the project if the required return is 20 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

At a required return of 20 percent, should the firm accept this project?

At what discount rate would you be indifferent between accepting the project and rejecting it? (Round your answer to 2 decimal places. (e.g., 32.16))

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

Explanation / Answer

NPV @ 8% $25693.36

Accept the project as NPV is +ve

NPV @ 20% -$14636.41

Reject the project as NPV is -ve

At the discount rate of 14.63% we would be indifferent between accepting and rejecting as NPV would be 0.

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