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RST Company is considering a capital investment of $600,000 in a new project. The project will generate the following annual cash inflows: Year Net Inflow

RST Company is considering a capital investment of $600,000 in a new project. The project will generate the following annual cash inflows:

Year

Net Inflow

1

$110,000

2

$120,000

3

$130,000

4

$140,000

5

$150,000

Requirements:

  1. Calculate the Accounting Rate of Return (ARR).
  2. Determine the Payback Period.
  3. Compute the Net Present Value (NPV) at an 8% discount rate.
  4. Calculate the Internal Rate of Return (IRR).
  5. Provide a recommendation based on the financial metrics.

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