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Question 4 ( 9 marks ) ABC Inc. is considering investing in the following capital project that is expected to provide 1 0 years of
Question marks ABC Inc. is considering investing in the following capital project that is expected to provide years of cash flows sales revenue net of operating costs The expected yearend cash flows are as follows: Project A: Years and $Years The required rate of return for the project is per year. Suppose Project As initial expenditure is $a Use the net present value NPV method to determine whether the project should be taken. marksb If ABC uses other decision rules such as IRR, would it arrive at the same decision as NPV Explain. marksc Put down the numeric formula NO calculation of the final answer is required for Project As internal rate of return IRR and state the condition under which Project A will be REJECTED. marks
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