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 3 14,400 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.)

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 13P
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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
3
14,400
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
At a required return of 12 percent, should the firm accept this project?
No
Yes
What is the NPV for the project if the required return is 24 percent? (A negative
answer 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
Transcribed Image Text: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 3 14,400 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 At a required return of 12 percent, should the firm accept this project? No Yes What is the NPV for the project if the required return is 24 percent? (A negative answer 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
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