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| Here is an example of a project that will last 2 years: | ||||||||||||||||
| The NPV for this project with an interest rate of 4% is: | ||||||||||||||||
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| This project should clearly be undertaken. Suppose now that the initial investment was 13000 $ instead of 10000$, the NPV would subsequently be -785.9 which indicates that the project is a potential loss and therefore should be discarded. Next section: Risk and return Go back |
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