Gruber Industries is evaluating a $70,000 project with the following cash flows. Years Cash Flows 1 $11,000
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Question:
Gruber Industries is evaluating a $70,000 project with the following cash flows.
Years | Cash Flows |
1 | $11,000 |
2 | $16,000 |
3 | $21,000 |
4 | $24,000 |
5 | $30,000 |
The coefficient of variation for the project is 0.847
Based on the following table of risk-adjusted discount rates, should the project be undertaken? Select the appropriate discount rate and then compute the net present value.
Coefficient of Variation | Discount Rate |
0 - 0.25 | 6% |
0.26 - 0.50 | 8% |
0.51 - 0.75 | 10% |
0.76 - 1.00 | 14% |
1.01 - 1.25 | 20% |
Related Book For
Understanding financial statements
ISBN: 978-0136086246
9th Edition
Authors: Lyn M. Fraser, Aileen Ormiston
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