A firm evaluates all of its projects by applying the NPV decision rule. A project under...

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Finance

A firm evaluates all of its projects by applying the NPVdecision rule. A project under consideration has the following cashflows:

Year Cash Flow
0 –$ 27,300
1 11,300
2 14,300
3 10,300
A) What is the NPV for the project if the required return is 10percent? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.)
At a required return of 10 percent, should the firm accept thisproject?
Yes
No
What is the NPV for the project if the required return is 26percent? (Negative amount should be indicated by a minussign. Do not round intermediate calculations and round your answerto 2 decimal places, e.g., 32.16.)
At a required return of 26 percent, should the firm accept thisproject?
Yes
No

Answer & Explanation Solved by verified expert

4.2 Ratings (795 Votes)

Solution A NPV at 10 required rate of return 252945 YES Accept this project as project is generating positive NPV after discounting cash flow with required rate of returns means the project is able to generate more return than required See Answer

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A firm evaluates all of its projects by applying the NPVdecision rule. A project under consideration has the following cashflows: YearCash Flow0–$27,300111,300214,300310,300A) What is the NPV for the project if the required return is 10percent? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.)At a required return of 10 percent, should the firm accept thisproject?YesNoWhat is the NPV for the project if the required return is 26percent? (Negative amount should be indicated by a minussign. Do not round intermediate calculations and round your answerto 2 decimal places, e.g., 32.16.)At a required return of 26 percent, should the firm accept thisproject?YesNo