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Suppose you are evaluating a project with the cash inflows shown in the following table
Suppose you are evaluating a project with the cash inflows shown in the following table. Your boss has asked you to calculate the project’s net present value (NPV). You don’t know the project’s initial cost, but you do know the project’s regular, or conventional, payback period is 2.5 years.
The project's annual cash flows are:
|
Year |
Cash Flow |
|---|---|
| Year 1 | $275,000 |
| Year 2 | 600,000 |
| Year 3 | 400,000 |
| Year 4 | 425,000 |
If the project’s desired rate of return is 10.00%, the project’s NPV is
209,340; 222,424; 235,508; OR 261,675
(Hint: Round your calculations to the nearest dollar.)
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