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Scenario: A company's management is evaluating a capital investment with the following details: Initial Investment: $40,000 Salvage Value at End of 5 Years: $5,000 Annual

Scenario: A company's management is evaluating a capital investment with the following details:

  • Initial Investment: $40,000
  • Salvage Value at End of 5 Years: $5,000
  • Annual Cash Inflows: $12,000
  • Cost of Capital: 9%

Requirements:

  1. Calculate the NPV.
  2. Calculate the IRR.
  3. Determine the Payback Period.
  4. Compute the PI.
  5. Assess if the project is financially viable.

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