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7. A firm is considering investing in a project with the following cash flows: (1.5+1.5 = 3marks) Year 1 2 3 4 5 6 7

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7. A firm is considering investing in a project with the following cash flows: (1.5+1.5 = 3marks) Year 1 2 3 4 5 6 7 8 Cash flow 15002000 2500 2000 2000 1,0001000500 (OMR) The initial investment is OMR 9,250. The firm has a required rate of return of 8 per cent. Calculate: a. the payback period (1.5 marks) b. the discounted payback (1.5 marks)

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