Problem: Your firm is trying to decide whether to invest in a new project opportunity based...

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Problem: Your firm is trying to decide whether to invest in a new project opportunity based on the following information. The

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Answer 1

Answer #1

1.

NPV = -CF0 + CF1/(1+r)¹ + ... + CFn/(1+r)ⁿ

NPV = -750,000 + 150000/1.1² + 100000/1.1³ + ... + 500000/1.1⁶

NPV = -14,086.87

2.

No, since NPV is negative, it means the project is not profitable

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Answer 2

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