Question
Star City is considering an investment in the community center that is expected to return the following cash flows: UseExhibit A.8. YearNet Cash Flow1$35,000265,000395,000495,0005115,000 This
Star City is considering an investment in the community center that is expected to return the following cash flows: UseExhibit A.8.
YearNet Cash Flow1$35,000265,000395,000495,0005115,000
This schedule includes all cash inflows from the project, which will also require an immediate $215,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered.
Required:
a.What is the net present value of the project if the appropriate discount rate is 25 percent?(Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.)
b.What is the net present value of the project if the appropriate discount rate is 15 percent?(Round PV factor to 3 decimal places.Negative amount should be indicated by a minus sign.)
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