Free cash flow information on potential investment project

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Reference no: EM131912582

Suppose you have the following initial outlay and free cash flow information on a potential investment project where upper management requires a payback period of 4 or fewer years (i.e. required payback period ≤ 3.99999 years) and that investors' Required Rate of Return is 15%. Also, suppose that you will make project acceptance or rejection decisions for each problem independently of decisions made in other problems. Suppose that, in determining whether to accept or reject this project, we are faced with an "unequal life problem." Solve for this project's Annualized NPV. That is, solve for the dollar payment value of a 7 year annuity whose (present) value is equal to the project's Net Present Value (NPV). Period CF 0 -100,000 1 13,000 2 50,000 3 31,000 4 34,000 5 18,000 6 16,000 7 12,000 a. $1,442.96 b. $1,823.89 c. $2,238.19 d. $2,595.85.

Reference no: EM131912582

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