Question
LMN Inc. has an opportunity to invest in a new project requiring an initial investment of $800,000. The expected cash inflows are as follows: Year
LMN Inc. has an opportunity to invest in a new project requiring an initial investment of $800,000. The expected cash inflows are as follows:
Year | Cash Flows |
0 | -$800,000 |
1 | $200,000 |
2 | $250,000 |
3 | $300,000 |
4 | $350,000 |
a. Calculate the payback period. b. Should the project be accepted if the cost of capital is 10%? Use the Net Present Value (NPV) method to support your decision.
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Calculus
Authors: Ron Larson, Bruce H. Edwards
10th Edition
1285057090, 978-1285057095
