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Chi Logistics is planning to upgrade its warehouse facilities. The initial investment for the upgrade is $700,000. The expected life of the facilities is 8

Chi Logistics is planning to upgrade its warehouse facilities. The initial investment for the upgrade is $700,000. The expected life of the facilities is 8 years with no salvage value. The upgrade is expected to generate additional annual revenue of $200,000, with annual operating costs of $80,000. The company’s cost of capital is 10%.

Requirement: Calculate the NPV, payback period, and IRR for the investment. Should Chi Logistics proceed with the upgrade? Provide a detailed analysis based on your calculations.


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