A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.) NPV $ At a required return of 10 percent, should the firm accept this project? No Yes What is the NPV for the project if the required return is 26 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.) NPV $ At a required return of 26 percent, should the firm accept this project? Yes No Solution a-1.NPV @10%=-$27,600+$11,600*0.9091+14,600*0.8264+10,600*0.7513=$2974.78 a-2. yes, because the npv of the project is positive. b-1.NPV @10%=-$27,600+$11,600*0.7937+14,600*0.6299+10,600*0.4999=-$3897.6 b-2. No, because the npv of the project is negative..

1. A firm evaluates all of its projects by applying the NPV decision rule. A project under
consideration has the following cash flows: What is the NPV for the project if the required
return is 10 percent? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g.,32.16.) NPV $ At a required return of 10 percent, should the firm accept
this project? No Yes What is the NPV for the project if the required return is 26 percent?
(Negative amount should be indicated by a minus sign. Do not round intermediate calculations
and round your answer to 2 decimal places, e.g.,32.16.) NPV $ At a required return of 26
percent, should the firm accept this project? Yes No
Solution
a-1.NPV @10%=-$27,600+$11,600*0.9091+14,600*0.8264+10,600*0.7513=$2974.78
a-2. yes, because the npv of the project is positive.
b-1.NPV @10%=-$27,600+$11,600*0.7937+14,600*0.6299+10,600*0.4999=-$3897.6
b-2. No, because the npv of the project is negative.