A project requires an initial investment of $1.2 million. It expects to generate a perpetual cash...

Group of answer choices

-$0.480 million

$0.265 million

$7,177 million

-$0.174 million

-$0.265 million

$0.174 million

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Expert Solution

NPV = [Year 1 cash flow / (cost of capital - growth rate)] - Initial investment

NPV = [0.1 / (0.11 - 0.0125)] - 1.2

NPV = [0.1 / 0.0975] - 1.2

NPV = 1.02564 - 1.2

NPV = -$0.174 million

jeff jeffy answered 2 years ago

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