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A new project is expected to cost $ 1 0 0 , 0 0 0 . in the first year the gross profits would be

A new project is expected to cost $100,000. in the first year the gross profits would be $20,000. In consecutive years, the profit is expected to go up by $5,000 from the previous year until year 6. a) What is the payback period? b) What is the net present worth of this project, if the company used a 15% rate of return? c) If the company expects the probability of commercial success to be 80%, what is the most initial investment that can be spent of the project?

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