You are CEO of AMD, maker of high-performance graphic cards for gaming computers. You are considering...
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You are CEO of AMD, maker of high-performance graphic cards for gaming computers. You are considering whether to launch a new product. See the cash flows every year below. Total CF 0 -895000 1 261450 2 607500 3 360225 4 199496 5 95022 (a) What is the project's NPV if the project's cost of capital is 9.4%? (b) Use your intuition to guess whether IRR should be higher than 9.4% or not, without calculating the IRR. Explain your intuition. You are CEO of AMD, maker of high-performance graphic cards for gaming computers. You are considering whether to launch a new product. See the cash flows every year below. Total CF 0 -895000 1 261450 2 607500 3 360225 4 199496 5 95022 (a) What is the project's NPV if the project's cost of capital is 9.4%? (b) Use your intuition to guess whether IRR should be higher than 9.4% or not, without calculating the IRR. Explain your intuition.
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a To calculate the net present value NPV of the project we need to discount the cash flows to their ... View the full answer
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