A firm evaluates all of its projects by applying the NPV decision rule. A projec

Question

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:

  

  

What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

  

  

  

What is the NPV for the project if the required return is 26 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

  

  

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:

Explanation / Answer

NPV is $2,529 select the project as it has positive NPV

NPV is negative -4,175 , do not select as has negative value.

Year Cf rate PV 0 -27300 10% (27,300.00) 1 11300 10%     10,272.73 2 14300 10%     11,818.18 3 10300 10%        7,738.54 total        2,529.45

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