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Twelve Inch Toes Corp. will invest $195,000 in a project that will not begin to...

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Finance

Twelve Inch Toes Corp. will invest $195,000 in a project that will not begin to produce returns until the fourth year. From the end of the fourth year until the end of the tenth year (7 periods), the annual cash flow will be $56,000.

a. Calculate the net present value if the cost of capital is 11 percent. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round other intermediate calculations and final answer to the nearest whole dollar. Negative answer should be indicated by a minus sign. Omit $ sign in your response.)

Net present value $

b. Should the project be undertaken?

multiple choice

  • No

  • Yes

Answer & Explanation Solved by verified expert
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