Taxmann is considering to take a new project. Management use Certainty Equivalent (CE) approach to evaluate the
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Taxmann is considering to take a new project. Management use Certainty Equivalent (CE) approach to evaluate the projects. The project is expected to generate cash flow of $ 57,500 for next 5 years. CE Factors are 0.90, 0.85, 0.75, 0.70 & 0.65. Projects requires initial investment of $1,50,000. Company’s cost of capital is 12% and risk free borrowing rate is 7%. What is the NPV of this project?
(A) $ 24,486
(B) $ 38,103
(C) $ 33,603
(D) $ 27,542
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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