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ACCT 621-Quiz 2 Name: Himanshu Patel. Student #: 2120475 Section 7. The Company is considering two capital investment proposals. Estimates regarding each project are provided
ACCT 621-Quiz 2 Name: Himanshu Patel. Student #: 2120475 Section 7. The Company is considering two capital investment proposals. Estimates regarding each project are provided below: Initial investment Project Sneaker Project Backpack $400,000 $540,000 Annual net income 42,000 48,000 Net annual cash inflow 112,000 128,000 Estimated useful life Salvage value 5 years 20,000 6 years 50,000 The company requires a 11% rate of return on all new investments. Using the profitability index, cash payback period and the net present value concept which project do you recommend? Defend your
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