A potential project has a net present value (NPV) of $28,356. This amount includes the initial cash outlay of $30,000. The correct decision would be to: proceed with the project because the NPV is positive. O cancel the project because the NPV is lower than the initial cash outlay.

A potential project has a net present value (NPV) of $28,356. This amount includes the initial cash outlay of $30,000. The correct decision would be to: proceed with the project because the NPV is positive. O cancel the project because the NPV is lower than the initial cash outlay.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 4PROB

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A potential project has a net present value (NPV) of $28,356. This amount includes
the initial cash outlay of $30,000.
The correct decision would be to:
O proceed with the project because the NPV is positive.
cancel the project because the NPV is lower than the initial cash outlay.

Calculate the payback period for a project that costs $65,000 and returns $24,000 at
the end of each year.
Express your answer in years rounded to 2 decimal places.
Your Answer:
Answer

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