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Procter & Gamble (P&G) is considering investing in new technology to improve its manufacturing process for laundry detergent. The company is evaluating two options: Option



Procter & Gamble (P&G) is considering investing in new technology to improve its manufacturing process for laundry detergent. The company is evaluating two options: Option A involves purchasing state-of-the-art equipment for $5 million, while Option B involves leasing the equipment for an annual fee of $1.2 million for five years.

Investment Option

Initial Investment

Annual Cost

Duration

Option A (Purchase)

$5,000,000

-

-

Option B (Lease)

-

$1,200,000

5 years

Analyze the financial implications of each option, considering factors such as net present value (NPV), internal rate of return (IRR), payback period, and risk. Discuss the strategic considerations P&G should take into account when deciding between the two options, including potential long-term benefits and risks associated with each.

                 

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