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A firm evaluates all of its projects by applying the NPV decision ru.pdf
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A firm evaluates all of its projects by applying the NPV decision ru.pdf

  1. A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow 0 –$ 27,400 1 11,400 2 14,400 3 10,400. What is the NPV for the project if the required return is 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $? What is the NPV for the project if the required return is 24 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $? Solution What is the NPV for the project if the required return is 12 percent? What is the NPV for the project if the required return is 24 percent?YearCash FlowPV factor 12%PV value0-274001.0000- 27400.001114000.892910178.572144000.797211479.593104000.71187402.51NPV1660.68
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