A project that provides annual cash flows of $16,900 for eight years costs $75,0

Question

A project that provides annual cash flows of $16,900 for eight years costs $75,000 today

What is the NPV for the project if the required return is 7 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

What is the NPV for the project if the required return is 19 percent? (Negative amount 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 what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

A project that provides annual cash flows of $16,900 for eight years costs $75,000 today

Explanation / Answer

NPV @ 7% = 16900*PVAF ( 7%,8years) - 75000

                 = (16900*5.9713)-75000

                 = 25915

NPV @ 19% = 16900*PVAF(19% 8 years) -75000

                   = ( 16900*3.9544)-75000

                  = -8171

Discount rate at which indifferent = 7% + 9.1234 i.e 16.1234%

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