Question
A student is considering starting an internet-based business.His (her) initial cash outlay to start this project is $100,000.He or she expects to have a positive
A student is considering starting an internet-based business.His (her) initial cash outlay to start this project is $100,000.He or she expects to have a positive annual cash flow of $25,000 for 5 years, and then sell the business for $10,000.He (she) is able to get a bank loan at a rate of 10%.Given the risk-level of the project, he (she) needs to earn a 12% return to justify taking on the project.He (she) decided the project should return his (her) initial capital back by 4 years.
1) calculate the NPV, IRR and Payback for this proposed project, 2) interpret the results from these tools to decide if the project should be accepted or rejected
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