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1) A company has an opportunity to invest in a project which will earn cash flows...

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Finance

1) A company has an opportunity to invest in a project whichwill earn cash flows of $100,000 in the first year, $200,000 in thesecond year and $350,000 in the third year. If their investor'srequired return is 12%, what is the most the company should pay forthe project? (Enter only numbers and decimals in your response.Round to 2 decimal places.)

2) A business has an project that will bring in annual cashflows of $250,000 for 8 years. The company's investor's require areturn of 12%. What is the most the company should pay for theproject? (Enter only numbers and decimals in your response. Roundto 2 decimal places.)

Answer & Explanation Solved by verified expert
3.8 Ratings (685 Votes)
The amount that the company would be willing to pay for the project is the present value of the future cash inflows discounted at the required rate of return Solution to PART1 Year Annual cash inflow    See Answer
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