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Project A has the following cash flows. Year 5 $ 50,000 896 Year 1 Year 2 Year 3 Year 4 Initial Investment $75,000 $ $

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Project A has the following cash flows. Year 5 $ 50,000 896 Year 1 Year 2 Year 3 Year 4 Initial Investment $75,000 $ $ $ $ Cash Inflow 20,000 25,000 30,000 36,000 Required Rate of Return Calculate the following measures (note show your calculations), a) NPV of the project A b) The project payback period and Profitability Index (showing a decimal figure). c) Suppose you want to consider inflation rate in NPV. If the annual inflation rate is 5%, what is the new NPV? (10 pts) (10 pts) (10 pts)

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