?(NPV with varying required rates of return?) Gubanich Sportswear is considering building a new factory to...

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?(NPV with varying required rates of return?) GubanichSportswear is considering building a new factory to producealuminum baseball bats. This project would require an initial cashoutlay of 4,000,000 and would generate annual free cash inflows of1,200,000 per year for 7 years. Calculate the? project's NPV?given:
a. A required rate of return of 9 percent
b. A required rate of return of 11 percent
c. A required rate of return of 15 percent
d. A required rate of return of 17 percent

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4.1 Ratings (694 Votes)

Net Present value NPV is the present value of future cash inflows minus the initial investment Here since the cash flows are equal every year so it is an annuity We have to find present value of the annuity of 1200000 after 7 years We will use the present value of annuity table to find the required NPV a At rate of 9 Present value of future cash flows 1200000 PVA 9 7 Years where PVA 9 7 years is the present value of 1 annuity at 9 for 7 years since the annual payments are of equal amount of 1200000 so it will be an annuity and See Answer

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?(NPV with varying required rates of return?) GubanichSportswear is considering building a new factory to producealuminum baseball bats. This project would require an initial cashoutlay of 4,000,000 and would generate annual free cash inflows of1,200,000 per year for 7 years. Calculate the? project's NPV?given:a. A required rate of return of 9 percentb. A required rate of return of 11 percentc. A required rate of return of 15 percentd. A required rate of return of 17 percent