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A manufacturing company is analyzing two new production lines. Below is the projected data: Production Line 1: Initial Investment: $300,000 Cost of Capital: 11% Annual
A manufacturing company is analyzing two new production lines. Below is the projected data:
- Production Line 1:
- Initial Investment: $300,000
- Cost of Capital: 11%
- Annual Cash Inflows: $90,000 for 4 years
- Production Line 2:
- Initial Investment: $350,000
- Cost of Capital: 9%
- Annual Cash Inflows: $95,000 for 4 years
Requirements:
- Determine the payback period for each production line.
- Calculate the NPV for each production line.
- Calculate the IRR for each production line.
- Advise on which production line should be implemented based on your analysis.
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