An investment has an installed cost of $537,800. The cash flows over the four-ye
ID: 2645273 • Letter: A
Question
An investment has an installed cost of $537,800. The cash flows over the four-year life of the investment are projected to be $212,750, $229,350, $196,010, and $144,720.
If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.)
An investment has an installed cost of $537,800. The cash flows over the four-year life of the investment are projected to be $212,750, $229,350, $196,010, and $144,720.
If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.)
NPV $
Explanation / Answer
An investment has an installed cost of $537,800. The cash flows over the four-year life of the investment are projected to be $212,750, $229,350, $196,010, and $144,720.
At an infinite discount rate, all the positive cash flows converge to $0. Thus, the NPV equals the cost of the project.
NPV = - 537,800
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