Should the company go ahead with the investment

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The company Plaza de la Victoria. SA. It is contemplating the option of launching a product on the market. for which it has commissioned a consulting firm to carry out a market study that has cost it $ 900.000. As a result of this study. it is concluded that the project will have a duration of two years during which it is estimated that cash flows wil be generated in the amount of 800.00 the first year and $ 1.150.000 the second year. Likewise. it is necessary to acquire a manufacturing equipment whose amount is s 1.000,000.

Should the company go ahead with the investment, If the profitability required from the project is 12% per year? Why?

Reference no: EM133234375

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