Question
Borealis Drilling is considering building a new manufacturing plant. The new plant will cost $15.7 million to construct. Management uses a discount rate of 8.8%.
Borealis Drilling is considering building a new manufacturing plant. The new plant will cost $15.7 million to construct. Management uses a discount rate of 8.8%. They anticipate the following cash flows for next seven years:
| Year | Cash Flow |
| 1 | 2.445m |
| 2 | 2.830m |
| 3 | 3.005m |
| 4 | 3.250m |
| 5 | 3.415m |
| 6 | 3.590m |
| 7 | 3.730m |
The proposed project's net present value is closest to:
| A. | $61,700. | |
| B. | $37,965. | |
| C. | $56,710. |
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Capital Markets Institutions Instruments And Risk Management
Authors: Frank J. Fabozzi
5th Edition
0262029480, 9780262029483
