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What is the project net present value

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Reference no: EM132810711

QUESTION - Ursus, Inc. is considering a project that would have a ten-year life and would require a $2,000,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net annual cash flow of $400,000. The company's required rate of return is 12%. (Ignore income taxes in this problem.)

Required -

a) What is the project's net present value? Should the company accept the project? WHY? OR WHY NOT? You must show all calculations.

b) What is the project's payback period? If the company cut-off payback period is 4 years, should the company accept the project? WHY? OR WHY NOT? You must show all calculations.

Reference no: EM132810711

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