Tamarisk Inc. is contemplating a capital project with a cost of $143000. The project will generate...
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Tamarisk Inc. is contemplating a capital project with a cost of $143000. The project will generate net cash flows of 542000 for year 1. $57000 for year 2 and $55000 for year 3. The asset has a salvage value of $10000 and straight-line depreciation will be used. The company's required rate of return is 10% Present Value PV of an Annuity Year of 1 at 10% of 1 at 10% 1 0.909 2 0.826 0.751 0.909 1.736 2.487 acceptable because it has a positive NPV. unacceptable because it zero NPV Ounacceptable because it earns a rate less than 10% acceptable because it has a return of greater than 10% Tamarisk Inc. is contemplating a capital project with a cost of $143000. The project will generate net cash flows of 542000 for year 1. $57000 for year 2 and $55000 for year 3. The asset has a salvage value of $10000 and straight-line depreciation will be used. The company's required rate of return is 10% Present Value PV of an Annuity Year of 1 at 10% of 1 at 10% 1 0.909 2 0.826 0.751 0.909 1.736 2.487 acceptable because it has a positive NPV. unacceptable because it zero NPV Ounacceptable because it earns a rate less than 10% acceptable because it has a return of greater than 10%
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Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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