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Scarborough Petroleum is considering an investment in the El Paso. Given the following information, calculate NPV, interpret the results, and make a recommendation to Scarborough.

Scarborough Petroleum is considering an investment in the El Paso. Given the following information, calculate NPV, interpret the results, and make a recommendation to Scarborough.

Initial investment in project ($150,000)
Estimated cash flows in Year 1 $60,000
Estimated cash flows in Year 2 $40,000
Estimated cash flows in Year 3 $30,000
Estimated cash flows in Year 4 $20,000
Estimated cash flows in Year 5 $10,000
Discount rate used by Scarborough 10%
Present Value Factor at 1 year .909
Present Value Factor at 2 years .826
Present Value Factor at 3 years .751
Present Value Factor at 4 years .683
Present Value Factor at 5 years .621

Calculate NPV (round to nearest whole dollar, include $ and commas, and parentheses if negative):

Will this investment yield more than or less than the discount rate of 10%?

Based on NPV, should Scarborough invest in El Paso? (yes or no)

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