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A project has cash flows of -$119,000, $53,000, $60,200, and $33,000 for years 0 to 3,...

A project has cash flows of -$119,000, $53,000, $60,200, and $33,000 for years 0 to 3, respectively. The required rate of return is 12 percent. Based on the net present value of ____, you should _____ the project.

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Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=53000/1.12+60200/1.12^2+33000/1.12^3

=$118801.25

NPV=Present value of inflows-Present value of outflows

=$118801.25-$119000

(198.75)(Negative).

Hence project must be rejected.

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