Compute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project M Time: 0 1 2 3 4 5 Cash flow: −$2,400 $630 $760 $800 $880 $380 Should the project be accepted or rejected? multiple choice accepted rejected

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2022-06-10T20:09:29+02:00

The net present value is $305.73. The project should be accepted.

Using this formula

Net present value=Cashflow÷(1+Cost of capital)^ time

Let plug in the formula

Net present value=-$2,400+ ($630÷(1+.09)^1) + ($760÷(1+.09)^2) + ($800÷(1+.09)^3) + ($880 ÷(1+.09)^4) + ($380÷(1+.09)^5)

Net present value=-$2,400+ ( $630÷(1.09)^1) + ($760÷(1.09)^2) + ($800÷(1.09)^3) + ($880 ÷(1.09)^4) + ($380÷(1.09)^5)

Net present value=-$2,400+ ($630÷1.09) + ($760÷1.1881) + ($800÷1.295029) + ($880 ÷1.41158161) + ($380÷1.538639549)

Net present value=-$2,400+ $577.98+$639.68+$617.75+623.41+$246.91

Net present value=$305.73

Based on the above calculation the project should be accepted.

Therefore the NPV is $305.73.

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