Alina's Cafe is expanding and expects the expansion to cause an increase in operating cash flows...
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Alina's Cafe is expanding and expects the expansion to cause an increase in operating cash flows of $42,000 per year for seven years. This expansion requires $78,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires an investment of $6,000 in net working capital at the start of the project, which will be recovered at the end of the project. What is the net present value of this expansion project at a required rate of return of 14 percent? Multiple Choice O O O -$261,711 -$98,507 $182,507 -$64,817 $98,507 Alina's Cafe is expanding and expects the expansion to cause an increase in operating cash flows of $42,000 per year for seven years. This expansion requires $78,000 in new fixed assets. These assets will be worthless at the end of the project. In addition, the project requires an investment of $6,000 in net working capital at the start of the project, which will be recovered at the end of the project. What is the net present value of this expansion project at a required rate of return of 14 percent? Multiple Choice O O O -$261,711 -$98,507 $182,507 -$64,817 $98,507
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Solution The net present value of the expansion project at a required return of 14 percent is 98507 ... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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