Question
38.Teradyne Industries is considering a new investment project.The project requires an initial investment of $12 million.Teradyne will also increase inventory by $4 million in year
38.Teradyne Industries is considering a new investment project.The project requires an initial investment of $12 million.Teradyne will also increase inventory by $4 million in year one.In year two, as Teradyne increases credit sales, its accounts receivable will increase by $5 million.In year five, when the project is complete, all accounts receivable will be collected, decreasing receivables by $5 million.Teradyne will also wind down its inventory by $2 million. If the project produces operating cash flows of $3 million per year and Teradyne's cost of capital is 6.8%, what is the NPV of the project?
Answer: $-2,724,329.68
How do you get this answer? I'm confused I keep on getting -4,032,818
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