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At what point should the project be abandoned

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Problem 1: ABC Company is considering a project with an initial cost of 500,000 and a net cash flow of 200,000 each year for the next three years. The Company's cost of capital is 12 percent. If they abandon the project at Year 1, they can recover additional inflow of P300,000 while if they abandon it at Year 2, the additional inflow that can be realized is P250,000. At what point should the project be abandoned? Show your computation of the NPV per year.

Reference no: EM132979486

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