For the given cash flows, suppose the firm uses the NPV decision rule. At a requ
ID: 2775830 • Letter: F
Question
For the given cash flows, suppose the firm uses the NPV decision rule.
At a required return of 11 percent, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
At a required return of 22 percent, what is the NPV of the project? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)
Year Cash Flow 0 –$ 146,000 1 70,000 2 69,000 3 53,000Explanation / Answer
1)
NPV = -146000 + 70000/1.11 + 69000/1.11^2 + 53000/1.11^3
= 11818.15
2)
NPV = -146000 + 70000/1.22 + 69000/1.22^2 + 53000/1.22^3
= -13076.98