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Safety Watches Ltd is considering developing an App, for which a return of 10% is required. The following information is available about the project: Year
Safety Watches Ltd is considering developing an App, for which a return of 10% is required. The following information is available about the project:
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Development costs88,000-----Sales revenue-76,000160,000174,000204,00054,000Variable costs-38,00080,00087,000102,00027,000Fixed costs-15,00015,00015,00015,00015,00010% discount factor1.0000.9090.8260.7510.6830.621
Required:
- Calculate the net cash flows each year
- Calculate the payback period of the project
- Calculate the net present value of the project
- List three benefits of Net Present Value
- What are the other two capital investment appraisal techniques? Briefly explain each.
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