Question

Waste Industries is evaluating a $55,200 project with the following cash flows.    Years Cash

Flows1 $9,100 2  19,000 3  21,500 4  20,200 5  31,900 

The coefficient of variation for the project is .834.

Coefficient of Variation Discount Rate0−.25  4%.26−.50  7%.51−.75  10%.76−1.00  12%1.01−1.25  18% 

Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Select the appropriate discount rate.

4% 7% 10% 12% 18%

b. Compute the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

c. Based on the net present value should the project be undertaken?

No or Yes

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