Question
Consider project Theta that requires an immediate investment of $100 that will be depreciated on a straight-line basis down to zero. The project inflows are
Consider project Theta that requires an immediate investment of $100 that will be depreciated on a straight-line basis down to zero. The project inflows are estimated to be $45 per year for 5 consecutive years (the project's life) starting at the end of year 1.The project outflows are estimated to be $20 per year for 5 consecutive years (the project's life) starting at the end of year 1. Assuming no salvage value, a tax rate of 30%, and a required rate of return of 10%, which of the following comes closest to Project Theta's NPV? NPV = -$10.92 NPV = $3.34 NPV = $6.67 NPV = $8.90 NPV = $0.45
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