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Should praha boat make the investment

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Reference no: EM132943642

Problem 1: Praha Boat, Inc. is thinking of developing a new recretional boat. Development will take four years and the cost is $150,000 per year. Once in production, the new boat is expected to make $290,000 per year for 12 years. Assume the discount rate is 7.5%. Calculate the investment opportunity. Should Praha Boat make the investment?

a. The NPV is $963,784. Accept the investment opportunity.
b. The NPV is $210,190. Accept the investment opportunity.
c. The NPV is $1,177,333. Accept the investment opportunity.
d. The NPV is $121,397. Reject the investment opportunity.

Reference no: EM132943642

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