A firm can purchase a fixed asset for a $13,000 initial investment The asset generates an annual after tax cash inflow of $4,000 for 4 years a Determine the net present value (NPV) of the asset, assuming that the firm has a 10 cost of capital Is the project acceptable b Determine the maximum requir...

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A firm can purchase a fixed asset for a $13,000 initial investment. The asset generates an annual

Question:

A firm can purchase a fixed asset for a $13,000 initial investment. The asset generates an annual after-tax cash inflow of $4,000 for 4 years.
a. Determine the (NPV) of the asset, assuming that the firm has a 10% cost of capital. Is the project acceptable?
b. Determine the maximum required rate of return (closest whole-percentage rate) that the firm can have and still accept the asset. Discuss this finding in light of your response in part a.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...