Cullumber Industries management is planning to replace some existing machinery in its plant. The cost of the
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Question:
Cullumber Industries management is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses an 18 percent discount rate for projects like this. Should management go ahead with the project?
Year | Cash Flow | |
---|---|---|
0 | -$3,505,700 | |
1 | 831,310 | |
2 | 1,013,300 | |
3 | 1,233,700 | |
4 | 1,283,660 | |
5 | 1,512,800 |
What is the NPV of this project?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1118845899
3rd edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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