Knoko Systems is considering a capital budgeting project with a life of five years that requires an
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Knoko Systems is considering a capital budgeting project with a life of five years that requires an outlay of $90,000. It has free cash flows each period as shown in the following distribution: P(FLF) FLF 0.10 $ 0 0.20 12,500 0.40 37,500 0.20 43,750 0.10 50,000 a. Assuming a risk-adjusted required rate of return of 0.20 is appropriate for projects of this level of risk, calculate the risk-adjusted net present value of the project. b. Should the project be accepted?
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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