Question
4. Consider a project with an initial investment (today, t = 0) of $278,875.00. This project will generate cash flows of $48,500 per year for
4. Consider a project with an initial investment (today, t = 0) of $278,875.00. This project will generate cash flows of $48,500 per year for the next 8 years. The remaining assets will be sold for scrap for 8,550 at the end of Year 8. What is the payback period for the project? Answer with a number rounded to three decimal places, e.g., 4.0877 should be entered as 4.088.
5. Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate cash flows of $49,500 per year for the next 8 years, at which time (end of Year 8) the company will pay $50,000 to another for clean-up and disposal. What is the Profitability Index (PI) of the project if shareholders demand a 16.295% return? Answer with a number rounded to three decimal places, e.g., 4.0877% should be entered as 4.088.
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