Cash flows are expected in the distant future

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Reference no: EM132029400

1. An Iwi (Social unit of New Zealand indigenous people) has the opportunity to purchase from the Crown (Central New Zealand Government) the right to log a forest. If the Iwi purchases the right, they will begin logging operations immediately. Using the information below evaluate whether the Iwi should proceed with the purchase.

2. Explain why the NPV of a relatively long-term project, defined as one for which a high percentage of its cash flows are expected in the distant future, is more sensitive to changes in the required rate of return than is the NPV of a short-term project. In addition, please provide an example to better demonstrate your explanation.

Reference no: EM132029400

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