Determine the maximum required rate of return

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NPV and maximum return A firm can purchase new equipment for a $24,000 initial investment. The equipment generates an annual after-tax cash inflow of 88,000 for 5 years.

a. Determine the net present value (NPV) of the asset, assuming that the firm has a cost of capital of 12%. Is the project acceptable?

b. Determine the maximum required rate of return that the firm can have and still accept the asset.

Reference no: EM131552641

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