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Q.3 A project that costs $2,500 to install will provide annual cash flows of $600 for the next 6 years. The firm accepts projects with
Q.3 A project that costs $2,500 to install will provide annual cash flows of $600 for the next 6 years. The firm accepts projects with payback periods with payback periods of less than 5 years. Will the project be accepted? Should this project be pursued if the discount rate is 2% ? What if the discount rate is 12% ? Will the firms decision change as the discount rate changes
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