1. Stefano's Spa is considering adding a new fish pedicure service, which Stefano estimates will cost...

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1. Stefano's Spa is considering adding a new fish pedicure service, which Stefano estimates will cost $165,000 up front and generate the following cash flows. Using the NPV rule with a discount rate of 12%, should he accept the project? Year 1 Year 2 Year 3 $63,120 70,800 91,080 2. For the project in Question 1, what would Stefano's decision be if he were using the IRR as his criterion? 1. Stefano's Spa is considering adding a new fish pedicure service, which Stefano estimates will cost $165,000 up front and generate the following cash flows. Using the NPV rule with a discount rate of 12%, should he accept the project? Year 1 Year 2 Year 3 $63,120 70,800 91,080 2. For the project in Question 1, what would Stefano's decision be if he were using the IRR as his criterion?

Answer rating: 100% (QA)

To determine whether Stefano should accept the project we can calculate the Net Present Value NPV an... View the full answer