A company is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay associated with the expansion would be $1,950,000 and the project would generate incremental after-tax cash flows of $450,000 per year for six years. The appropriate required rate of return is 9 percent.
1. Calculate the NPV
2. Should project be accepted?© BrainMass Inc. brainmass.com June 3, 2020, 6:13 pm ad1c9bdddf
The solution shows and explains the formula for calculation followed by the solution and a statement of whether the project should be accepted.