Question
Several companies, including Green Forest Industrial and Yellow Sand Health, are considering project A, which is believed by all to have a level of risk
Several companies, including Green Forest Industrial and Yellow Sand Health, are considering project A, which is believed by all to have a level of risk that is equal to that of the average-risk project at Green Forest Industrial. Project A is a project that would require an initial investment of 6,748 dollars and then produce an expected cash flow of 11,754 dollars in 8 years. Project A has an internal rate of return of 7.18 percent. The weighted-average cost of capital for Green Forest Industrial is 8.2 percent and the weighted-average cost of capital for Yellow Sand Health is 9.87 percent. What is the NPV that Yellow Sand Health would compute for project A?
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