a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=20,000/1.19+16000/1.19^2+6000/1.19^3
=31665.85
NPV=Present value of inflows-Present value of outflows
=31665.85-29,000
=$2665.85(Approx).
b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=20,000/1.36+16000/1.36^2+6000/1.36^3
=25741.65
NPV=Present value of inflows-Present value of outflows
=25741.65-29,000
=$(3258.35)(Approx).(Negative).
A firm evaluates all of its projects by using the NPV decision rule. Year Cash Flow...
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