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A company is considering a project with an initial investment of $80,000. The annual inflow from...

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Finance

A company is considering a project with an initial investment of$80,000. The annual inflow from the project is $10,000 for tenyears. The salvage value for the project is $12,000 in year ten.The cost of capital is 12%. Should the company make thisinvestment?

Answer & Explanation Solved by verified expert
4.1 Ratings (519 Votes)
Net Present Value NPV of the Investment Period Annual Cash Flow Present Value factor at 12 Present Value of Cash Flow 1 10000 0892857 892857 2 10000 0797194 797194 3 10000 0711780 711780    See Answer
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Transcribed Image Text

A company is considering a project with an initial investment of$80,000. The annual inflow from the project is $10,000 for tenyears. The salvage value for the project is $12,000 in year ten.The cost of capital is 12%. Should the company make thisinvestment?

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