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Required: a. Compute the present value of the cash inflows for each investment using a 12% discount rate. (6 marks) I Amount of Cash Flows
Required: a. Compute the present value of the cash inflows for each investment using a 12% discount rate. (6 marks) I Amount of Cash Flows Present Value of Cash Flows Investment A Investment B Year(s) Investment Investment B A 2021 2022 $3,300 2,600 2,100 $980 760 690 2023 Total b. Compute Net Present Value. (6 marks) Investment A Investment B Present Value of Cash Flows Initial Cost Net Present Value (NPV) C. Which investment opportunities should be accepted based on the NPV analysis? Why? (3 marks) d. What is the Payback period for Investment A and Investment B? (8 marks) e. Which investment opportunities should be accepted based on the payback period? Why? (2 marks) Required: a. Compute the present value of the cash inflows for each investment using a 12% discount rate. (6 marks) I Amount of Cash Flows Present Value of Cash Flows Investment A Investment B Year(s) Investment Investment B A 2021 2022 $3,300 2,600 2,100 $980 760 690 2023 Total b. Compute Net Present Value. (6 marks) Investment A Investment B Present Value of Cash Flows Initial Cost Net Present Value (NPV) C. Which investment opportunities should be accepted based on the NPV analysis? Why? (3 marks) d. What is the Payback period for Investment A and Investment B? (8 marks) e. Which investment opportunities should be accepted based on the payback period? Why? (2 marks)
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