firm is considering a $12,000 risky project. The expected cash flows are $3,000 in year 1, $5,000 in year 2, and $7,000 in year 3. The firm's cost of capital is 11%, but the financial manager uses a hurdle rate of 9% for less-risky projects and 13% for riskier projects. Should the firm invest in this riskier project?
No, the NPV is -$578.05 |
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Yes, the NPV is $578.05 |
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No, the NPV is -$120.85 |
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Yes, the NPV is $365.98 |
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Yes, the NPV is $120.85 |
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