A project that provides annual cash flows of $2,900 for nine years costs $9,600

Question

A project that provides annual cash flows of $2,900 for nine years costs $9,600 today.

At a required return of 8 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 29 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).)

At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

At a required return of 8 percent, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Requirement 1: NPV= -9600+2900PVIFA(8%,9)= $8515.975
Requirement 2:NPV= -9600+2900PVIFA(29%,9)= $-610.864
Requirement 3: IRR, 9600= 2900PVIFA(R,9), R= 26.59%

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