NPV if the required return is 12%
NPV = -28,700 + 12,700/(1 + 0.12)^1 + 15,700/(1 + 0.12)^2 + 11,700/(1 + 0.12)^3
NPV = $3,483.0584912536
Yes, the frim should accept the project at the required return of 12% because NPV is positive.
NPV if the required return is 24%
NPV = -28,700 + 12,700/(1 + 0.24)^1 + 15,700/(1 + 0.24)^2 + 11,700/(1 + 0.24)^3
NPV = -$2,110.8455573831
No, the frim should not accept the project at the required return of 24% because NPV is negative.
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A firm evaluates all of its projects by applying the NPV decision rule. A project under...
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