Question
PQR Industries is evaluating a new project that involves an initial investment of $1,000,000. The project is expected to generate annual cash inflows of $250,000
PQR Industries is evaluating a new project that involves an initial investment of $1,000,000. The project is expected to generate annual cash inflows of $250,000 for 7 years. The equipment will be depreciated over 7 years using the straight-line method.
Requirements:
- Calculate the payback period.
- Calculate the NPV at a discount rate of 10%.
- Calculate the IRR.
- Determine the profitability index.
- Advise PQR Industries on the investment decision.
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
