Question
GHI Industries is evaluating the purchase of new equipment costing $120,000. The equipment is expected to generate the following cash flows: Year 1: $40,000 Year
GHI Industries is evaluating the purchase of new equipment costing $120,000. The equipment is expected to generate the following cash flows:
- Year 1: $40,000
- Year 2: $45,000
- Year 3: $50,000
- Year 4: $55,000
Requirements: a. Calculate the NPV at a discount rate of 9%. b. Determine the IRR. c. Find the payback period and the discounted payback period. d. Evaluate the profitability index. e. Discuss the financial viability of the investment based on your calculations.
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Basic Technical Mathematics
Authors: Allyn J. Washington, Richard Evans
12th Edition
0137529899, 9780137529896
