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Project K has a cost of 40,000 and its expected net cash inflows at the end of each of 4 years are 16,000, 20,000, 8,000,
Project K has a cost of 40,000 and its expected net cash inflows at the end of each of 4 years are 16,000, 20,000, 8,000, and 7,000. Compute the payback and discount payback assuming 12% cost of capital.
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What kind of information do these methods provide us with? What is the drawback of using these methods as the only evaluation tool of accepting and rejecting projects?
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