Question
A-12 Present Value of Cash Flows Star City is considering an investment in the community center that is expected to return the following cash flows:
A-12 Present Value of Cash Flows Star City is considering an investment in the community center that is expected to return the following cash flows: Use Exhibit A.8. Year Net Cash Flow 1 $ 37,000 2 67,000 3 97,000 4 97,000 5 117,000 This schedule includes all cash inflows from the project, which will also require an immediate $217,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 26 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.) b. What is the net present value of the project if the appropriate discount rate is 10 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.)
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