Your firm has an opportunity to make an investment of $50,000. Its cost of capital is 12
Question:
Your firm has an opportunity to make an investment of $50,000. Its cost of capital is 12 percent. It expects after tax cash flows (including the tax shield from depreciation) for the next 5 years to be as follows:
Year 1......................$10,000
Year 2...................... 20,000
Year 3...................... 30,000
Year 4...................... 20,000
Year 5...................... 5,000
a. Calculate the NPV
b. Calculate the IRR (to the nearest percent
c. Would you accept this project?
Cost Of CapitalCost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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a Computation of Net Present value year Cash flow A DCF 12 Present Value 0 ...View the full answer
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Related Book For 
Managerial Economics
ISBN: 978-0133020267
7th edition
Authors: Paul Keat, Philip K Young, Steve Erfle
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