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Cash flows are positive. thanks If a company has a required rate of return of 15%...

Cash flows are positive. thanks

If a company has a required rate of return of 15% should the following project be accepted based on these expected cash flows below? Year 0= 274,000, year 1=68,000, year 2=73,000, year3=76,500, year4=78,000, year 5=82,500, year 6=77,000. Why or why not should the company move forward with this endeavor? Thanks

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Answer #1

Answer:

All cash flows are positive. This implies company is getting a stream of positive cash flows even without any net investment in year 0.

Without any calculations, such projects are acceptable.

NPV is calculated below:

Company should move forward with this endeavor as NPV is positive (which is obvious).

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