Assume that a firm has a cost of money of 0.15. It is considering an investment with the following cash flows:
Time Cash flow
0: -27,000,000
1: 12,000,000
2: 11,520,000
3: 15,552,000
Should the investment be accepted?
The following events are assumed to take place at time 1. Determine the cash flow for investment evaluation purposes. The tax rate is 0.35.