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Lamar Advertising is considering investing in a project that requires an after-tax initial investment of $128...

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Finance

Lamar Advertising is considering investing in a project thatrequires an after-tax initial investment of $128 million and isexpected to produce after-tax cash inflows of $29 million inadvertising revenue for each of the next five years. The firm'scost of capital is 11%. Based on this information, the NPV of theproject is _________ million and the firm should _________ theproject

$12.2; accept

-$12.2; reject

$20.8; accept

-$20.8; reject

Answer & Explanation Solved by verified expert
3.8 Ratings (347 Votes)
Solution The NPV of the project is 208    See Answer
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Transcribed Image Text

Lamar Advertising is considering investing in a project thatrequires an after-tax initial investment of $128 million and isexpected to produce after-tax cash inflows of $29 million inadvertising revenue for each of the next five years. The firm'scost of capital is 11%. Based on this information, the NPV of theproject is _________ million and the firm should _________ theproject$12.2; accept-$12.2; reject$20.8; accept-$20.8; reject

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