ABC Corporation is evaluating a new project with the following details: Initial investment: $500,000 Cash flows for
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Question:
ABC Corporation is evaluating a new project with the following details:
- Initial investment: $500,000
- Cash flows for 5 years: Year 1: $100,000, Year 2: $150,000, Year 3: $200,000, Year 4: $250,000, Year 5: $300,000
- Discount rate: 10%
Requirements:
- Calculate the NPV of the project.
- Determine the internal rate of return (IRR).
- Compute the payback period.
- Assess if the project should be accepted based on the NPV and IRR.
- Perform a sensitivity analysis by increasing the discount rate to 12%.
Related Book For
Essentials of Managerial Finance
ISBN: 978-0324422702
14th edition
Authors: Scott Besley, Eugene F. Brigham
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