A project will require a $125,000 investment today and produce the after-tax cash flows (and only the
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Question:
A project will require a $125,000 investment today and produce the after-tax cash flows (and only the cash flows) listed below. What is the net present value of this investment if you require an 11% return? Would there be any potential issues in this case with using the internal rate of return in your analysis?
Explain your answer.
Year
After-tax Net
Cash Flow
Year 1 - $40,000
Year 2 - $50,000
Year 3 - (-$30,000)
Year 4 - $60,000
Year 5 - $75,000
Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date: