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Question about Capital Budgeting-NPV

Your firm is looking at a new investment opportunity, Project Alpha, with net cash flows as follows:
---- Net Cash Flows ----
Project Alpha

Initial Cost at T-0 (Now) ($10,000)
cash inflow at the end of year 1 6,000
cash inflow at the end of year 2 4,000
cash inflow at the end of year 3 2,000

a. Calculate the project's Net Present Value (NPV), assuming your required rate of return
is 10%

b. On the basis of your analysis in part a, should the project be accepted or rejected?

Solution Preview

Capital Budgeting-NPV
Your firm is looking at a new investment opportunity, Project Alpha, with net cash flows as follows:
---- Net Cash Flows ----
Project Alpha

Initial Cost at T-0 (Now) ($10,000)
cash inflow at the end of year ...

Solution Summary

This solution is comprised of a detailed explanation to calculate the project's Net Present Value (NPV), assuming your required rate of return is 10% and answer whether the project should be accepted or rejected.

$2.19