Kessben Ltd, is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of$450,000 per year for six years. The appropriate required rate of return is 9 percent. Calculate the net present value. Calculate the profitability index. Calculate the internal rate of return.
Kessben Ltd, is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of$450,000 per year for six years. The appropriate required rate of return is 9 percent. Calculate the net present value. Calculate the profitability index. Calculate the internal rate of return.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 9P
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Kessben Ltd, is considering a major expansion of its product line and has estimated the following
-
- Calculate the
net present value . - Calculate the profitability index.
- Calculate the
internal rate of return .
- Calculate the
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