Question
Alpha Services is considering a new project that requires an initial investment of $500,000. The project is expected to generate annual cash flows of $120,000
Alpha Services is considering a new project that requires an initial investment of $500,000. The project is expected to generate annual cash flows of $120,000 for 6 years. The company’s cost of capital is 12%.
Requirement: Calculate the NPV, payback period, and IRR for the project. Should Alpha Services proceed with the project? Provide a detailed explanation based on your calculations.
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
