a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=15000/1.11+17000/1.11^2+13000/1.11^3
=$36816.58
NPV=Present value of inflows-Present value of outflows
=$36816.58-$34000
=$2816.58(Approx).
b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=15000/1.24+17000/1.24^2+13000/1.24^3
=$29971.30
NPV=Present value of inflows-Present value of outflows
=$29971.30-$34000
=$(4028.7)(Approx).(Negative).
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
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