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You are evaluating a project for your company that has an open ended life. Cash flow in year one is expected to be $25,000, and
You are evaluating a project for your company that has an open ended life. Cash flow in year one is expected to be $25,000, and this cash flow is expected to grow at a rate of 5% per year for 3 years. After this 3 year period, your expectations are that the cash flows for the project will remain constant. The initial investment for the project is expected to be $110,000. Your cost of capital is 12%. Using this information, calculate the NPV for the project. Is it acceptable?
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