Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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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
0
1
2
3
NPV
Cash Flow
-$ 28,600
12,600
What is the NPV for the project if the required return is 11 percent? (Do not round
Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV
At a required return of 11 percent, should the firm accept this project?
O No
15,600
11,600
Yes
What is the NPV for the project if the required return is 25 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.)
At a required return of 25 percent, should the firm accept this project?
O Yes
O NO
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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 0 1 2 3 NPV Cash Flow -$ 28,600 12,600 What is the NPV for the project if the required return is 11 percent? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 11 percent, should the firm accept this project? O No 15,600 11,600 Yes What is the NPV for the project if the required return is 25 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.) At a required return of 25 percent, should the firm accept this project? O Yes O NO
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