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Jam is considering a 5 year project with involves the following: Initial investment in equipment of $540,000. Inventory and other working capital requirements of $20,000

Jam is considering a 5 year project with involves the following:  Initial investment in equipment of $540,000. Inventory and other working capital requirements of $20,000 are projected. 

Projected annual cash receipts on this project of $200,000 Projected annual cash expenses of $40,000 Major repairs [non-capital] of $20,000 would be required in year 3 The equipment is estimated to have a resale value of $25,000 at the conclusion of the project. Jam's cost of capital is 14%.

Required:

Calculate the NPV on this project.

Calculate the payback period on this project.

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To calculate the Net Present Value NPV of the project and the payback period we need to consider the cash flows over the 5year period Lets break down ... blur-text-image

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