Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $26,020, and the project will yield cash inflows of $8,000 per year for 5 years. The firm has a cost of capital of 8%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. c. Would you recommend that the firm accept or reject the project?

Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is $26,020, and the project will yield cash inflows of $8,000 per year for 5 years. The firm has a cost of capital of 8%. a. Determine the net present value (NPV) for the project. b. Determine the internal rate of return (IRR) for the project. c. Would you recommend that the firm accept or reject the project?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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