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Problem A. Using discounted cash flow models to make capital investment decisions Sprocket Industries is deciding whether to automate one phase of its production process.
Problem A. Using discounted cash flow models to make capital investment decisions
Sprocket Industries is deciding whether to automate one phase of its production process. The manufacturing equipment has a six-year life and will cost $905,000. Projected net cash inflows are as follows:
Year 1 | $260,000 |
Year 2 | $254,000 |
Year 3 | $225,000 |
Year 4 | $215,000 |
Year 5 | $205,000 |
Year 6 | $173,000 |
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1. Compute this project
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