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Decision: Emphasize the K707 product Requirement 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at
Decision: Emphasize the K707 product Requirement 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8,410,000. Expected annual net cash inflows are $1,500,000, would begin producing a new product at a cost of $8,150,000. This plan is expected to generate net cash inflows of $1,120,000 per year for 10 years, the estimated useful life of the product line. Estimated residual value for Plan B is $990,000. uses straight-line depreciation and requires an annual return of 8%. with zero residual value at the end of 10 years. Under Plan B, Division D Division D 4a. Compute the payback, the ARR, the NPV, and the profitability index for both plans. Begin by calculating the payback for both plans. (Round your answers to one decimal place, XX)
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