NEED THE DISCOUNT RATE PART OF THE QUESTION: MUST ROUND FINAL ANSWER TO 2 DECIMA

Question

NEED THE DISCOUNT RATE PART OF THE QUESTION: MUST ROUND FINAL ANSWER TO 2 DECIMAL PLACES WITH NO OTHER CALCULATIONS BEING ROUNDED:

A project that costs $4,150 to install will provide annual cash flows of $1,400 for each of the next 8 years. Calculate the NPV if the discount rate is 15%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

NPV $ 2132.22

Is this project worth pursuing?

Yes IT IS

How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Discount rate %

Explanation / Answer

Higher discount rate before the project could be rejected

NPV = 0

Present value of cash inflows - Present value of cash outflows

1400*PVAF ( R,8 years) - 4150 = 0

1400*PVAF ( R,8years ) = 4150

PVAF ( R,8years) = 4150/1400

PVAF ( R,8years) = 2.9643

R = 29.53%   

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