FM11 46 - 0 1 | | 10%-5,000 2,100 3,100 5,200 NPV = -$273....

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Answer: Here are the time lines for the 3 alternative lives: No termination: 0 1 2 3 | | | | 10% -5,000 2,100 2,000 1,750 0 1,750 NPV = -$123. Terminate after 2 years: 0 1 2 | | | 10% -5,000 2,100 2,000 2,000 4,000 NPV = $215. Terminate after 1 year:
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Unformatted text preview: 0 1 | | 10%-5,000 2,100 3,100 5,200 NPV = -$273. We see (1) that the project is acceptable only if operated for 2 years, and (2) that a project's engineering life does not always equal its economic life. Mini Case: 11 - 46...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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