PART 1: A firm is considering an unusual project represented by the selling of a machine...
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PART 1: A firm is considering an unusual project represented by the selling of a machine today that will result in an immediate inflow of $540. Without the use of the machine the firm will incur an annuity of expenditures or outflows of $85 per year that begin at the end of year one, and continue for 8 consecutive years. The required rate of return is 7.60%. What is the project's net present value? ANSWER TO PART 1: $ Place your answer in dollars and cents. If your answer is negative, then indicate this by placing a "minus" sign before the number. Do not use a dollar sign or comma. For example, an answer of negative one thousand one hundred and eleven dollars as -1111. Work your analysis using at least 4 decimal places of accuracy. NOW GO ON TO THE SECOND PART! PART 2. Given your NPV, should the firm accept or reject the project? Type the word "accept" if you believe they should go ahead with the project or the word "reject" if you believe they should not go ahead with the project. ANSWER TO PART 2: PART 1: A firm is considering an unusual project represented by the selling of a machine today that will result in an immediate inflow of $540. Without the use of the machine the firm will incur an annuity of expenditures or outflows of $85 per year that begin at the end of year one, and continue for 8 consecutive years. The required rate of return is 7.60%. What is the project's net present value? ANSWER TO PART 1: $ Place your answer in dollars and cents. If your answer is negative, then indicate this by placing a "minus" sign before the number. Do not use a dollar sign or comma. For example, an answer of negative one thousand one hundred and eleven dollars as -1111. Work your analysis using at least 4 decimal places of accuracy. NOW GO ON TO THE SECOND PART! PART 2. Given your NPV, should the firm accept or reject the project? Type the word "accept" if you believe they should go ahead with the project or the word "reject" if you believe they should not go ahead with the project. ANSWER TO PART 2:
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To calculate the net present value NPV of the project we need to discount the cash flows using the ... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
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