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Question 2 (25 marks) Risky Business is looking at a project with the estimated cash flow as follows: Initial Investment at start of project: $3,600,000

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Question 2 (25 marks) Risky Business is looking at a project with the estimated cash flow as follows: Initial Investment at start of project: $3,600,000 Cash Flow at end of Year 1: $500,000 Cash Flow at end of Years 2 through 6: $625,000 each year Cash Flow at end of Year 7 through 9: $530,000 each year Cash Flow at end of Year 10: $385,000 Risky Business wants to know the payback period, NPV, IRR, and Pl of this project. The appropriate discount rate for the project is 14% and the cutoff period is six years for major projects. Determine if the project is accepted or rejected under the four different decision models. Give reasons for your decisions. Should the company finally accept the project? Give reason

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