6. (Each part is worth 2 pts.) A new project that is being considered requires an...

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Finance

6. (Each part is worth 2 pts.) A new project that is beingconsidered requires an initial investment of $375,000. The expectedfuture cash flows are $250,000 per year for four years. Assume theappropriate discount rate is 15%. a. What is the NPV? b. Suppose that the firm that’s considering this project has amarket value of $2.2 million. If the firm accepts this project,what will be the firm’s new market value? c. What isthe IRR? d. What is the discounted payback period?Include partial periods (e.g., x.xx years) in your response.

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3.6 Ratings (328 Votes)

6 a The initial investment is 375000 CF0 375000 CF1 250000 CF1 TO CF4 250000 375000 250000115 2500001152 2500001153 2500001154 3387445907 At discount rate of 15 the NPV of See Answer

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6. (Each part is worth 2 pts.) A new project that is beingconsidered requires an initial investment of $375,000. The expectedfuture cash flows are $250,000 per year for four years. Assume theappropriate discount rate is 15%. a. What is the NPV? b. Suppose that the firm that’s considering this project has amarket value of $2.2 million. If the firm accepts this project,what will be the firm’s new market value? c. What isthe IRR? d. What is the discounted payback period?Include partial periods (e.g., x.xx years) in your response.