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Consider an investment that costs $1million and has a cash inflow of $400,000 every year for 5 years. The required return is 5%, and payback
Consider an investment that costs $1million and has a cash inflow of $400,000 every year for 5 years. The required return is 5%, and payback cutoff is 4 years. a) What is the payback period? b) What is the discounted payback period? c) What is the NPV? d) What is the IRR? e) Should we accept the project? f) What method should be the primary decision rule? g) When is the IRR rule unreliable
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