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Company has $300,000 to invest and wishes to evaluate the following three projects. years X($) Y($) Z($) 0 (100,000) (120,000) (90,000) 1 40,000 70,000 70,000
Company has $300,000 to invest and wishes to evaluate the following three projects.
years X($) Y($) Z($)
0 (100,000) (120,000) (90,000)
1 40,000 70,000 70,000
2 40,000 50,000 10,000
3 40,000 40,000 20,000
4 40,000 20,000 -
cost of capital 12% 12% 12%
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Which project(s) would you recommend using:
a.Payback Period (PP) in nominal and discounted values.
b.Net Present Value (NPV)
c.Profitability Index (PI)
d.The internal rate of return (IRR) (hint: use 30% for X and Y, and 5% for Z)
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