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Calculate the net present value (npv)

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Reference no: EM131979740

Oil Search is considering a major investment in a new oil field in Western Australia. According to initial estimates, the investment outlay would be $2 500 000 and the project would generate incremental cash flows of $500 000 per year for nine years. The required rate of return by the investors is 7%.

(a) Calculate the Net Present Value (NPV)

(b) Calculate the Accounting Rate of Return

(c) Calculate the Internal Rate of Return (IRR)

(d) Should this project be accepted?

Reference no: EM131979740

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