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Requirements: Compute the NPV at a discount rate of 10%. Determine the IRR. Evaluate the projects acceptability based on NPV and IRR. Calculate the Payback
Requirements:
- Compute the NPV at a discount rate of 10%.
- Determine the IRR.
- Evaluate the project’s acceptability based on NPV and IRR.
- Calculate the Payback Period.
- Assess the NPV’s sensitivity to a discount rate change to 12%.
Year | Cash Inflows | Cash Outflows |
0 | $0 | $7,000 |
1 | $1,800 | $0 |
2 | $1,800 | $0 |
3 | $1,800 | $0 |
4 | $1,800 | $0 |
5 | $1,800 | $0 |
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Solution To address the requirements lets follow the steps one by one 1 Compute the NPV at a discount rate of 10 The formula for NPV is NPV Cash Flow ...
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Financial Management Core Concepts
Authors: Raymond M Brooks
2nd edition
132671034, 978-0132671033
