A firm evaluates all of its projects by using the NPV decision rule. At a requir

Question

A firm evaluates all of its projects by using the NPV decision rule. At a required return of 12 percent, the NPV for the following project is $ ________ and the firm should accept the project. At a required return of 31 percent, the NPV is $ ________ and the firm should reject the project. (Do not include the dollar signs ($). Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16))

Year     Cash Flow
   0       -$30,000
   1         21,000
   2         16,000
   3          9,000

Explanation / Answer

1) Solving for NPV when the discount rate is 12%:

The formula to calculate NPV = -CF0 + CF1/(1 + r)1 +

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