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            | Topic: | Business | 
        
            | Number of pages / Number of words: | 3 / 708 | 
                
    
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(1 + R) (1 + R)^2 (1 + R)^8
where R is the required return.
Net Present Value:
NPV = PV - TI where TI = Total Initial Investment
Using a calculator we find that:
PV = $2,229,365.07
NPV = PV - TI = $2,229,365.07 - $1,200,000 = $1,029,365.07
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Based on your answer for Q2, do you think the project should be
accepted? Why? Assume Superior has a P/B (payback) policy of not accepting projects with life over three years.
Definition of Payback Criterion:
-Accept a project if its payback period is less than maximum
acceptable payback period.
-Reject a project if its payback period is longer than maximum
acceptable payback period...
        
        
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