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1. Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of th
Pheasant Pharmaceuticalss weighted average cost of capital is 7%, and project Beta has the same risk as the firms average p
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Answer #1

Ans -$877365

Reject, Since the NPV is negative

Year Project Cash Flows (i) DF@ 7% DF@ 7% (ii) PV of Project ( (i) * (ii) )
0 -2225000 1 1                    (22,25,000)
1 350000 1/((1+7%)^1) 0.935                        3,27,103
2 400000 1/((1+7%)^2) 0.873                        3,49,375
3 425000 1/((1+7%)^3) 0.816                        3,46,927
4 425000 1/((1+7%)^4) 0.763                        3,24,230
NPV                      (8,77,365)
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