Effective periodic rate conversion formula

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A project promises to offer monthly, stable cash flows for 7 years of $1,500 per month. The stated annual discount rate for these cash flows is 9% per year. The investment amount for the project is an initial, on-time payment of $10,000 due immediately.

What is the NPV of the project?

HINT: Use the “effective periodic rate” conversion formula to calculate the effective monthly interest rate: The interest is compounded monthly, or 12 times per year.

Reference no: EM132006789

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