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Fijisawa Inc. is considering a major expansion of its product line and has estimated the following...

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Question

Finance

Fijisawa Inc. is considering a major expansion of its productline and has estimated the following cash flows associated withsuch an expansion. The initial outlay would be

?$1,850,000?,

and the project would generate incremental free cash flowsof

?$700,000

per year for

6

years. The appropriate required rate of return is

8

percent.

a. Calculate the

NPV.

b. Calculate the

PI.

c. Calculate the

IRR.

d. Should this project be? accepted?

Answer & Explanation Solved by verified expert
3.7 Ratings (486 Votes)
aNet present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 1850000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow    See Answer
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Transcribed Image Text

Fijisawa Inc. is considering a major expansion of its productline and has estimated the following cash flows associated withsuch an expansion. The initial outlay would be?$1,850,000?,and the project would generate incremental free cash flowsof?$700,000per year for6years. The appropriate required rate of return is8percent.a. Calculate theNPV.b. Calculate thePI.c. Calculate theIRR.d. Should this project be? accepted?

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