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You are a small business owner and are interested in starting a new product line for your business. Suppose that the initial investment to introduce the new product is $100,000. You expect the new product line to generate cash flows of $12,000 one year from now. Each year thereafter, you expect the cash flows to increase at an annual rate of 3%. If you estimate the project cost of capital for this new product line to be 14%, then what is the net present value of this to your business and should you go ahead with it?

-$20,335.70; reject

-$14,285.70; reject

$4,226.21; accept

$9,090.91; accept

$12,363.64; accept

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92348763

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