Risk-adjusted discount rate method

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$120,000 initial investment, cash flows of $30,000 per year for four years

Your cost of capital is 7.0% if your capital spending is less than $700,000. It goes up to 8.0% if you exceed that $700,000 threshold.

Your company uses the Risk-Adjusted Discount Rate method to account for differences in project risk; the risk premium is 3%.

A. What is the NPV and IRR for the projects using the appropriate cost of capital? B. Evaluate risk for the project

Reference no: EM131068336

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