Question
5. In 2013, $9,000 is invested in a business project. Assume a discount rate of 10 percent per year. Assume all cash flows occur
5. In 2013, $9,000 is invested in a business project. Assume a discount rate of 10 percent per year. Assume all cash flows occur on Dec. 31 of the year listed. The profit stream from the project is as follows: Year 2014 2015 2016 2017 2018 2019 2020 Profit Stream $1,000 $1,000 $1,000 $2,000 $3,000 $4,000 $4,000 a) Draw the cash flow diagram. b) Determine the discounted payback period. (10% discount) c) Determine the Net Present Value for 2013. d) Instead of using a discount rate of 10%, determine the IRR for the project. (attach a copy of the EXCEL spreadsheet you used). 10
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Fundamentals of Cost Accounting
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