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Products Inc. is analysing a 5 -year project that produces sales of 100 million per year (in years 1 through 5). Under the assumption that
Products Inc. is analysing a 5 -year project that produces sales of 100 million per year (in years 1 through 5). Under the assumption that accounts receivable are 10% of current year sales, the project has a positive NPV of 5 million. However, the management is concerned that customers will pay at a slower rate, which will put accounts receivable for the project at 20% of current year sales. The projects discount rate is 10%. The NPV of the project under this alternative scenario is closest to a. 1.55 million b. 4 million c. 2.7 million
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