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A retail chain is evaluating the purchase of new equipment costing $3,20,000, which is expected to generate savings of $75,000 annually for 8 years. The
A retail chain is evaluating the purchase of new equipment costing $3,20,000, which is expected to generate savings of $75,000 annually for 8 years. The equipment has a salvage value of $20,000 at the end of its useful life. The company uses a discount rate of 12%.
Requirements:
- Calculate the NPV of the investment.
- Compute the IRR of the investment.
- Determine the Discounted Payback Period.
- Evaluate the sensitivity of the NPV to a 2% increase in the discount rate.
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