With discount rate of 7% and cashflow timeline of Yr.0=cash outflow(cost) of $3,000; Yr.1=cash inflow of $1,000; Yr.2=cash inflow $1,050; Yr.3=cash inflow $1,100; Yr.4=cash inflow $900

What's the net present value? Should we accept or reject?

The Present value = $3,436.22 > $3000

Net Present value + $436.22 for 7%

Since NPV is positive, we can accept the project

The IRR is that value of r that satisfies

3000= 1000/(1+r)+1050/(1+r)^{2}+1100/(1+r)^{3}+900/(1+r)^{4}

The value turns out to be 13.35%

Since it is > 7%, the project can be accepted

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