Question
Please analyze the following project. All cash flows are in millions, they are assumed to be after-tax and they occur evenly over each year. The
Please analyze the following project. All cash flows are in millions, they are assumed to be after-tax and they occur evenly over each year. The client requires a 20% rate of return.
| Year | Cash Flow | Discounted Cash Flows |
| 0 | -4,500 |
|
| 1 | 1,500 |
|
| 2 | 1,700 |
|
| 3 | 4,500 |
|
| IRR |
|
|
| NPV |
|
|
The NPV for this Project is (given a 20% discount rate):
Multiple Choice
-
The Project has an NPV of $415.25
-
The Project has an NPV of $534.72
-
The Project has an NPV of $257.65
-
The Project has an NPV of $414.50
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Cornerstones of Financial and Managerial Accounting
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
2nd edition
978-0538473484, 538473487, 978-1111879044
