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Please help Solving. Thank you. The CFO at Rabbit Corporation has asked you to analyze two proposed capital investments, Projects A and B. Each project
Please help Solving. Thank you.
The CFO at Rabbit Corporation has asked you to analyze two proposed capital investments, Projects A and B. Each project has a cost of $10,000, and the cost of capital is 12% for each. The projects expected net cash flows are as follows:
year 0 | Project 1 (10,000) | Project 2 (10,000) |
1 | 6,500 | 3,500 |
2 | 3,000 | 3,500 |
3 | 3,000 | 3,500 |
4 | 1,000 | 3,500 |
- Calculate each projects payback period.
- Calculate each projects net present value (NPV).
- Calculate each projects internal rate of return (IRR).
- Calculate each projects profitability index (PI).
- Which project or projects should be accepted if they are independent?
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