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Net present value
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A company is considering the purchase of a new machine with a initial outlay of $4500 and expected cash flows in years 1-4 of $2200 per year. The risk adjusted discount rate for the firm is 12 percent and risk free rate is 5 percent. What is the net present value of this project?
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Here are two
http://www.scribd.com/doc/6580257/Managerial-E conomics-Chapter-14
http://www.energystar.gov/index.cfm?c=business .EPA_BUM_CH3_InvestAnalysis
Read them, see how they relate to your question and have a go.
Here are two
http://www.scribd.com/doc/6580257/Managerial-E conomics-Chapter-14
http://www.energystar.gov/index.cfm?c=business .EPA_BUM_CH3_InvestAnalysis
Read them, see how they relate to your question and have a go.