a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=12300/1.11+15300/1.11^2+11300/1.11^3
=$31761.37
NPV=Present value of inflows-Present value of outflows
=31761.37-28300
=$3461.37(Approx)
Hence since NPV is positive;project must be accepted(Yes)
b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=12300/1.25+15300/1.25^2+11300/1.25^3
=$25417.6
NPV=Present value of inflows-Present value of outflows
=25417.6-28300
=$-2882.4(Negative)
Hence since NPV is negative;project must be rejected(No)
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
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