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A company has $150,000 to be invested in Project C or Project D. The expected cash flows are as follows: Year Project C Project D
A company has $150,000 to be invested in Project C or Project D. The expected cash flows are as follows:
Year | Project C | Project D |
1 | $50,000 | $30,000 |
2 | $50,000 | $40,000 |
3 | $50,000 | $60,000 |
4 | $50,000 | $70,000 |
5 | $50,000 | $80,000 |
The cost of capital is 8%.
Required:- Calculate for each project:
- Simple payback period
- Discounted payback period
- Net present value
- Internal rate of return
- Profitability index
- Recommend which project to undertake based on your calculations.
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