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Waste Industries is evaluating a $53,100 project with the following cash flows. Years Cash Flows 1 $ 9,650 2 21,300 3 26,400 4 21,600 5
Waste Industries is evaluating a $53,100 project with the following cash flows.
Years | Cash Flows | |||
1 | $ | 9,650 | ||
2 | 21,300 | |||
3 | 26,400 | |||
4 | 21,600 | |||
5 | 31,900 | |||
The coefficient of variation for the project is 1.115.
Coefficient of Variation | Discount Rate | ||||||
0 | .25 | 7 | % | ||||
.26 | .50 | 9 | % | ||||
.51 | .75 | 13 | % | ||||
.76 | 1.00 | 18 | % | ||||
1.01 | 1.25 | 19 | % | ||||
Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Select the appropriate discount rate.
7% | |
9% | |
13% | |
19% | |
18% |
b. Compute the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
c. Based on the net present value should the project be undertaken?
No | |
Yes |
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