my work mode : This shows what is correct or incorrect for the work you nave com

Question

my work mode : This shows what is correct or incorrect for the work you nave compe Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 11 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, r Time: Cash flow: $235,000 $65,800 $84,000 $141,000 $122,000 $81,200 Use the NPV decision rule to evaluate this project. (Do not round intermediate calculations and round your final answer to2 decimal places.) Answer is complete but not entirely correct. NPV S 51,778.31 Should it be accepted or rejected? rejected accepted Prev 1 of 10 Next

Explanation / Answer

NPV = PV of inflows - PV of outflows

= (59279.28+68176.28+103097.98+80365.18+48188.25)-235000

= 359106.98-235000

= 124,106.98

Decision: Since the NPV is positive, the project is acceptable.

Year Cashflow PVF@11% Cashflow*PVF 0           (235,000) 1.0000            (235,000) 1                65,800 0.9009           59,279.28 2                84,000 0.8116           68,176.28 3              141,000 0.7312 103,097.98 4              122,000 0.6587           80,365.18 5                81,200 0.5935           48,188.25

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