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Belleville, Inc. is hoping to invest $100,000 right now in energy efficiency of their plant. They expect to reduce energy cos
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Answer #1

Investment Amount = CF = 100000

Savings from Year 1 to 8 = P = 18000

WACC = r = 11%

To accept the project, the NPV should be > 0

=> NPV = -CF + P/(1+r) + P/(1+r)2 + .... P/(1+r)8 = -CF + P[1- (1+r)-n]/r

= -100000 + 18000[1- (1+0.11)-8]/0.11

= - $7369.79

Since the NPV <0, the project should not be accepted

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