A firm is evaluating a project with cash flows over 4 years. The NPV is calculated using discount rates of 12% and 24%. With a 12% discount rate, the project has a positive NPV of $1660.68. With a 24% discount rate, the project has a negative NPV of -$5,426.32.

1. A firm evaluates all of its projects by applying the NPV decision rule. A project under
consideration has the following cash flows: Year Cash Flow 0 –$ 27,400 1 11,400 2 14,400 3
10,400. What is the NPV for the project if the required return is 12 percent? (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV $?
What is the NPV for the project if the required return is 24 percent? (Negative amount should be
indicated by a minus sign. Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
NPV $?
Solution
What is the NPV for the project if the required return is 12 percent?
What is the NPV for the project if the required return is 24 percent?YearCash FlowPV factor
12%PV value0-274001.0000-
27400.001114000.892910178.572144000.797211479.593104000.71187402.51NPV1660.68