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Sunland Corporation is considering adding a new product line. The cost of the factory and equipment to produce this product is $1,800,000. Company management expects
Sunland Corporation is considering adding a new product line. The cost of the factory and equipment to produce this product is $1,800,000. Company management expects net cash flows from the sale of this product to be $390,000 in each of the next eight years.
a) If Sunland uses a discount rate of 11 percent for projects like this, what is the net present value of this project?
b) What is the internal rate of return?
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