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# Point - Point:(10, thatrequiresa\$27, \$8,000forfouryearsand...

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Point: Set your personal BHAGs and make them happen!  (10,000 hours can begin TODAY ) Suppose we are considering a capital investment  that requires a  \$27,400 initial outlay  and provides  annual net cash flows of  \$8,000  for  four years  and  \$16,000  at the  end of the fifth year .  The firm’s  required rate of return is  15% . What is the NPV of our potential investment? -27,400   CFj  (Time 0) 8,000  CFj  (Time 1) 8,000  CFj  (Time 2) 8,000  CFj  (Time 3) 8,000  CFj  (Time 4) 16,000   CFj  (Time 5) 15    I/YR        Shift   NPV Solution:  NPV = \$3,395 -27,400   CFj  (Time 0) 8,000  CFj  (Time 1-4) 4                             Shift  Nj   16,000   CFj  (Time 5) 15    I/YR        Shift   NPV Solution: NPV = \$3,395

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Suppose we are considering a capital investment  that  costs \$38,300  and provides annual net cash  flows of  \$6,000  for  four years  and  \$19,000  at the  end of the fifth year .  The firm’s required rate of  return is  14% .
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