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A corporation is planning an expansion project with an initial cost of $40,000. The expected annual cash flows are $10,000 for the next 6 years.
A corporation is planning an expansion project with an initial cost of $40,000. The expected annual cash flows are $10,000 for the next 6 years. The corporation uses a discount rate of 8%.
Requirements:
- Calculate the NPV of the expansion project.
- Determine the IRR.
- Compute the Discounted Payback Period.
- Assess the project using the Profitability Index.
- Recommend whether to proceed with the expansion based on the calculated financial indicators.
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