A firm is evaluating a capital investment project with the following initial investments and net cash...
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A firm is evaluating a capital investment project with the following initial investments and net cash inflows. Initial Investment Cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Project $ 1,500,000 $300,000 500,000 600,000 600,000 600,000 The company's cost of capital is 12%. (1) How long is the payback period of the project? Explain it. (2) Calculate the Net Present Value (NPV) of the project. Explain it (3) Calculate the Internal Rate of Return (IRR) of the project. Explain it. (4) Should the company accept the project? Why? (10 points) A firm is evaluating a capital investment project with the following initial investments and net cash inflows. Initial Investment Cash flows Year 1 Year 2 Year 3 Year 4 Year 5 Project $ 1,500,000 $300,000 500,000 600,000 600,000 600,000 The company's cost of capital is 12%. (1) How long is the payback period of the project? Explain it. (2) Calculate the Net Present Value (NPV) of the project. Explain it (3) Calculate the Internal Rate of Return (IRR) of the project. Explain it. (4) Should the company accept the project? Why? (10 points)
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Answer rating: 100% (QA)
1 The payback period of a project is the time it takes for the initial investment to be recovered through the net cash inflows To calculate the paybac... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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