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Generic Motors Corporation is planning to invest $225,000 in zero year (today) in new equipment. The investment is expected to generate net cash flows of
Generic Motors Corporation is planning to invest $225,000 in zero year (today) in new equipment. The investment is expected to generate net cash flows of $90,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year.
1) What is the Net Present Value of this project? 2) What is the payback period for this project? 3) What is the accounting rate of return for this project?
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