Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...

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Finance

Fijisawa Inc. is considering a major expansion of its productline and has estimated the following cash flows associated withsuch an expansion. The initial outlay would be
?$1,850,000?,
and the project would generate incremental free cash flowsof
?$700,000
per year for
6
years. The appropriate required rate of return is
8
percent.
a. Calculate the
NPV.
b. Calculate the
PI.
c. Calculate the
IRR.
d. Should this project be? accepted?

Answer & Explanation Solved by verified expert

3.7 Ratings (486 Votes)

aNet present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 1850000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow See Answer

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Transcribed Image Text

Fijisawa Inc. is considering a major expansion of its productline and has estimated the following cash flows associated withsuch an expansion. The initial outlay would be?$1,850,000?,and the project would generate incremental free cash flowsof?$700,000per year for6years. The appropriate required rate of return is8percent.a. Calculate theNPV.b. Calculate thePI.c. Calculate theIRR.d. Should this project be? accepted?