Solution-What is the npv of the proposed investment

What is the npv of the proposed investment

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Reference no: EM133153192

1a) Goodeal Inc. is considering the purchase of a new material handling system for a cost of $15 million. This system is expected to generate a positive cash flow of $1.8 million per year in perpetuity. What is the NPV of the proposed investment if the appropriate discount rate is 9.5 percent?

b) Trace Enterprises is considering an investment that will cost $318,000. The investment produces no cash flows for the first year. In the second year, the cash inflow is $47,000. The inflow for the next two years would be $198,000 and $226,000 consecutively before ceasing permanently. Use the NPV method to determine if the project should be accepted if Trace requires a 11.5 percent rate of return.

Reference no: EM133153192

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What is the npv of the proposed investment

Reference no: EM133153192

Reference no: EM133153192

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