Question: A project has the following cash flows. What is the Net Present Value (NPV) if the discount rate is 10%? Cash Flows: Year 0: -$25,000

A project has the following cash flows. What is the Net Present Value (NPV) if the discount rate is 10%?

Cash Flows:

  • Year 0: -$25,000
  • Year 1: $5,000
  • Year 2: $10,000
  • Year 3: $15,000
  • Year 4: $20,000

Requirements:

  1. Calculate the NPV.
  2. Determine if the project should be accepted based on NPV.
  3. Identify the break-even point.
  4. Assess the risk if the discount rate increases to 12%.

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