Question
Read the following scenario and answer the questions given below: Brilly stove company is considering a new product line to supplement its range line it
Read the following scenario and answer the questions given below:
Brilly stove company is considering a new product line to supplement its range line it s anticipated that the new product line involve cash investment of 700,000 at time 0 and$1,000,000 in year 1 . after tax cash inflows of 250,000 are expected in year 2, $300,000 in year 3, $350,000 in year 4, and $400,000 each year thereafter through year 10.while the product line might be viable after year 10 ,the company prefers to be conservative and end all calculation at the time.
Question 1
if the required rate of return is 15 percent, what is the net present value of the project? Do you think the project is acceptable? Marks 20
Question 2
What is the project pay back period ? Marks 20
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