Question
bez Company is considering a project that requires an initial investment of $60,200 and will generate net cash flows of $16,200 per year for 6
bez Company is considering a project that requires an initial investment of $60,200 and will generate net cash flows of $16,200 per year for 6 years. Ibez requires a return of 8% on its investments. The present value factor of an annuity for 6 years at 8% is 4.6229. a. Compute the net present value of the project. b. Determine whether the project should be accepted or rejected on the basis of net present value.
Compute the net present value of the investment. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar. Enter net cash outflows as negative values.)
Year Net Cash Flows Present Value of 1 at 13% Present Value of Net Cash F
Year 1 $8,800 0.8850
Year 2 10,800 0.7831
Year 3 12,800 0.6931
Totals $32,400 0
Initial investment (27,000)
Net present value $(27,000)
Determine whether the investment should be accepted or rejected on the basis of net present value.
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