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Business, 04.07.2020 14:01 perezriii4133

The Bull Company, a lawn mower manufacturer, is considering the introduction of a new model. The initial investment required is $22 million. Net cash flows over the 4-year life cycle and the corresponding certainty-equivalents of the new model are as follows:Year Net Cash Flow Certainty-equivalent Factor1 $15 million 0.902 $13 million 0.803 $11 million 0.604 $9 million 0.35The firm's cost of capital is 14% and the risk-free rate is 6%. Bull uses the certainty-equivalent approach in evaluating above-average risk investments such as this one. What is the project's certainty-equivalent NPV?a. $4,164,432.44b. $26,164,432.44c. $8,028,394.34d. $30,028,394.34

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