Assume the following for the Miami Publishing capital budgeting project 

initial cash flow = - $750,000

operating cash flows = $500,000; $300,000; $150,000

terminal cash flow = $200,000

WACC = 10%.

Based on the assumptions above, answer the following:

A. What is the net present value of the project?

B. What is the internal rate of return of the project?

C. How does the value of the project compare to its price? How do you know?

D. How does the expected return of the project compare to its required return? How do you know?

E. Should be project be accepted? Why or why not?

Answer rating: 100% (QA)

Answers A To calculate the net present value NPV of the project we need to discount the cash flows a... View the full answer