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Fiancial Management

Year Undiscounted free cash flows
0 (380,000)
1 20,000
2 30,000
3 200,000
4 175,000
5 130,000
6 145,000

Required rate of return 15%

5. Assume the required rate of return increases to 20%. The net present value of the investment would

a. increase
b. decrease
c. stay the same
d. become negative
e. both “b” and “d”, above.

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Year Cash ...

$2.19