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The actual investment expenditure should not exceed the

Exercise

NPV

A planned factory expansion project has an estimated initial cost of $800,000. Based on a discount rate of 20 percent, the present value of the future cost savings from the expansion is $843,000.

Required:

To yield exactly a 20 percent return on investment, the actual investment expenditure should not exceed the $800,000 estimated cost by more than what amount?

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Accounting Basics: The actual investment expenditure should not exceed the

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