Question: Lepton Industries has a project with the following projected cash flows: Initial Cost, Year 0: $468,000 Cash flow year one: $135,000 Cash flow year two:

Lepton Industries has a project with the following projected cash flows:
Initial Cost, Year 0: $468,000
Cash flow year one: $135,000
Cash flow year two: $240,000
Cash flow year three: $185,000
Cash flow year four: $135,000
a. Using an 8% discount rate for this project and the NPV model, determine whether the company should accept or reject this project?
b. Should the company accept or reject it using a 14% discount rate?
c.
Should the company accept or reject it using a 20% discount rate?

Step by Step Solution

3.45 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a NPV 468000 135000108 240000108 2 185000108 3 135000108 4 NPV 468000 12500000 20576132 146... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

296-B-F-F-M (2593).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!