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Please do not use Excel (a) Tusha Ltd. is considering a new product line to supplement its range line. It is anticipated that the new
Please do not use Excel
(a) Tusha Ltd. is considering a new product line to supplement its range line. It is anticipated that the new product line will involve cash investment of \\( K 9,000,000 \\) at this time and \\( \\mathrm{K} 12,000,000 \\) in year 1 . After tax cash inflows of \\( K 4,500,000 \\) are expected in year 2, K5,000,000 in year 3, K5,500,000 in year 4, and \\( K 6,000,000 \\) each year thereafter through year 10 . While the product line might be viable after year 10 , the company prefers to be conservative and end all calculations at that time. (i) If the required rate of return is 12 percent, what is the NPV of the project? Is it acceptable? (5 marks) (ii) What is the projects payback periodStep by Step Solution
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