Initial cost: $467,000 Cash flow year one: $134,000 Cash flow year two: $230,000 Cash flow year three: $187,000 Cash flow year four: $134,000 a. Using a discount rate of 10% for this project and the NPV model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 14%? c. Should the company accept or reject it using a discount rate of 20%?
Initial cost: $467,000 Cash flow year one: $134,000 Cash flow year two: $230,000 Cash flow year three: $187,000 Cash flow year four: $134,000 a. Using a discount rate of 10% for this project and the NPV model, determine whether the company should accept or reject this project. b. Should the company accept or reject it using a discount rate of 14%? c. Should the company accept or reject it using a discount rate of 20%?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Initial cost:
$467,000
Cash flow year one:
$134,000
Cash flow year two:
$230,000
Cash flow year three:
$187,000
Cash flow year four:
$134,000
a. Using a discount rate of
10% for this project and the NPV model, determine whether the company should accept or reject this project.
b. Should the company accept or reject it using a discount rate of 14%?
c. Should the company accept or reject it using a discount rate of 20%?
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