Solution-Expected interest rate on investments

Expected interest rate on investments

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Reference no: EM133056168

This discussion has two parts to it (calculation and decision with support). Using the information, below, determine whether or not ABC Corporation will pull the trigger on this project.

ABC Corporation has the opportunity to invest in a new product line. Using the cash flow option on a business calculator or net present value (NPV) function in Excel, determine the NPV of the project and determine ABC corporation should go with the project or not. Be sure to post what your NPV is dollars, and then justify your decision with a narrative that supports your recommendation and demonstrates a full understanding of NPV.

Initial cost of project ($575,000)

Cash flow - Year 1 ($55,000)

Cash flow - Year 2 $62,000

Cash flow - Year 3 $110,000

Cash flow - Years 4 & 5 $175,000

Cash flow - Year 6 $97,000

Cash flow - Year 7 (terminal year) $37,500 which includes the $12,000 it will cost to shut down the operation

ABC Corporation's expected interest rate on investments is 6.35%

Reference no: EM133056168

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Expected interest rate on investments

Reference no: EM133056168

Reference no: EM133056168

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