Question
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are two and two and a half years, respectively.
Time 0 1 2 3 4 5
Cash Flow -125K 65K 78K 105K 105K 25K
Calculate the NPV and use the NPV rule to evaluate this project; should it be accepted or rejected and why?
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The Company Valuation Playbook Invest With Confidence
Authors: Charles Sunnucks
1st Edition
1838470816, 978-1838470814
