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Assume that Leo has a new venture that costs $100,000

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Assume that Leo has a new venture that costs $100,000. The company expects to have cash flows of $40,000 per year for the first four years and $50,000 in year 5. There will be no salvage value and the company’s cost of capital is 9.23%. Based on this data, calculate the NPV and decide if you would accept the project using the NPV method?

Hint: You accept a project if NPV is positive. NPV = Present value of future cash flows minus initial investment

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