Question
Waste Industries is evaluating a $55,500 project with the following cash flows. Years Cash Flows 1 $ 9,120 2 20,200 3 26,600 4 16,300 5
Waste Industries is evaluating a $55,500 project with the following cash flows.
Years Cash Flows
1 $ 9,120
2 20,200
3 26,600
4 16,300
5 26,300
The coefficient of variation for the project is 0.475.
Coefficient of Variation | Discount Rate | ||||||
0 | 0.25 | 7 | % | ||||
0.26 | 0.50 | 9 | % | ||||
0.51 | 0.75 | 13 | % | ||||
0.76 | 1.00 | 16 | % | ||||
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%
-
19%
-
13%
-
9%
-
16%
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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