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Calculate: Determine the NPV for the Electrobicycle project. Use the annual project cash flow from the table above. For the required rate of return, use
Calculate:
- Determine the NPV for the Electrobicycle project. Use the annual project cash flow from the table above. For the required rate of return, use the 19% percent value
Write:
In your post, include the following:
- Calculate the NPV of the Electrobicycle project. Be sure to show your NPV calculations.
- Explain, in your own words, why working capital investments are subtracted each year in the cash flows.
- Explain, in your own words, the meaning of the required rate of return for the project.
- Assume the auto company has a required rate of return of 15%. Based on the required rate of return you used for the Electrobicycles (19%), is the Electrobicycle project more or less risky than the auto company? Explain your answer.
- Based on your concluded NPV, should the company invest in this project to build Electrobicycles? Justify your answer.
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