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Pharoah is contemplating a capital project costing $38807. The project will provide annual cost savings of $15000 for 3 years and have a salvage value
Pharoah is contemplating a capital project costing $38807. The project will provide annual cost savings of $15000 for 3 years and have a salvage value of $2000. The company's required rate of return is 10%. The company uses straight line depreciation. Year Present Value PV of an Annuity of 1 at 10% of 1 at 10% 909 .909 .826 1.736 .751 2.487 This project is acceptable because it has a positive NPV. acceptable because it has zero NPV. unacceptable because it has a negative NPV. unacceptable because it earns a rate less than 10%
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