You are reviewing a project which requires $165,000 of initial investment and generates $63, 120, $70, 800 and $91, 080 of cash flows. Your required return for assets of current risk level is 12%.
Calculate NPV. Do capital budgeting tor this project based on NPV rule. In other words, decide whether you accept or reject this project.
Calculate NPV if required rate of return is 20%. Do capital budgeting for this project based on NPV rule with required rate of return of 20%.
Calculate NPV if you can sell the fixed assets for this project at after-tax salvage value of $30,000. Required rate of return is still 20%.