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You have been asked by your CFO to compute the NPV and IRR for an upcoming six - year capital equipment project. She says: the
You have been asked by your CFO to compute the NPV and IRR for an upcoming sixyear capital equipment project. She says: the project generates the following cash flows: $ Million outflow in year zero; $ Million cash inflow per year in years one through five; $ Million cash inflow in year six plus the project generates an additional $ Million cash inflow in year six from the salvage selling the project equipment for salvage The CFO tells you: we assume the cash outflow happens at time zero and the cash inflows all happen at the end of each year example: year one cash flow comes at the end of year one and so forth The company has a cost of capital. Based on NPV and IRR, would you accept this project? and why?
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