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    Evaluating Net Present Value and Internal Rate of Return

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    A project that costs $3000.00 to install will provide annual cash flows of $800.00 for each of the next 6 years. Is this project worth pursuing if the discount rate is 10%? How high can the discount rate be before you would reject the project?

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    https://brainmass.com/business/net-present-value/evaluating-net-present-value-and-internal-rate-of-return-42655

    Solution Preview

    Present value of annual cash flow of $800.00 for 6 years
    is obtained by multiplying the annual cash flow by Present Value factor for an annuity PVIFA

    n= 6 years
    r= 10%
    PVIFA (6 periods, 10.% rate=) 4.355261

    Therefore Present ...

    Solution Summary

    The solution evaluates if project worth pursuing if the discount rate is 10% using NPV and determines how high can the discount rate be before the project is rejected.

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