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School

Liberty University *

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Course

530

Subject

Finance

Date

Feb 20, 2024

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Pages

1

Uploaded by ProfOkapiPerson648

A project that costs $4,450 to install will provide annual cash flows of $1,500 for each of the next 6 years. . What is the NPV if the discount rate is 11%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. $ 0.01% 1,895.81 NPV . How high can the discount rate be before you reject the project? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Discount 1% % rate 24.78 Explanation: Some values below may be shown as rounded for display purposes, though unrounded numbers should be used for the actual calculations. . NPV = —$4450 + 81,500 X | 511~ gprscccih S1895-8!1 At a discount rate of 11%, the project has a positive NPV and should be pursued. . If the discount rate rises above the IRR of 24.78% the project is no longer attractive since the NPV would now become negative. ~$4.450 + 31,500 x |4 - k| =0 Solving for IRR = 24.78% Calculator computations: . CF0 =-4,450 CO1=1,500, FO1=6 I=11 NPV CPT = 1,895.81 . CF0 =-4,450 CO1=1,500, FO1=6 IRR CPT =24.78
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