Study Problems

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Net Present Value

  1. 11–1. (Calculating NPV) (Related to Checkpoint 11.1 on page 335) Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project will require an initial cash outlay of $8,000,000 and will generate annual net cash inflows of $2,000,000 per year for six years. Calculate the project’s NPV for each of the following discount rates:

    1. 9 percent

    2. 11 percent

    3. 13 percent

    4. 15 percent

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