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At a required return of 10 percent, what is the NPV of the project? (Do not incl

ID: 2694441 • Letter: A

Question


At a required return of 10 percent, what is the NPV of the project?(Do not include the dollar sign ($).Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

At a required return of 26 percent, what is the NPV of the project?(Do not include the dollar sign ($).Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations.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 include the percent sign (%).Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

A project that provides annual cash flows of $2,250 for nine years costs $9,300 today.

Explanation / Answer

Hi, Please find the answers as follows: Part A: = -9930 + 2250/(1+.10)^1 + 2250/(1+.10)^2 + 2250/(1+.10)^3 + 2250/(1+.10)^4 + 2250/(1+.10)^5 + 2250/(1+.10)^6 + 2250/(1+.10)^7 + 2250/(1+.10)^8 + 2250/(1+.10)^9 = 3027.84 Part B: = -9930 + 2250/(1+.26)^1 + 2250/(1+.26)^2 + 2250/(1+.26)^3 + 2250/(1+.26)^4 + 2250/(1+.26)^5 + 2250/(1+.26)^6 + 2250/(1+.26)^7 + 2250/(1+.26)^8 + 2250/(1+.26)^9 = -2357.27 Part C: 17% is the discount rate. Thanks.

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