Question
(Q1)An investment project costs $15,000 and has annual cash flows of $3,800 for six years. What is the discounted payback period if the discount rate
(Q1)An investment project costs $15,000 and has annual cash flows of $3,800 for six years. What is the discounted payback period if the discount rate is 15 percent?
(Q2)Bill plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $385,000, to be paid immediately. Bill expects aftertax cash inflows of $84,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash inflow occurs at the end of the first year. Assume the required return is 13 percent. What is the project's profitability index? Should it be accepted?
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