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Task 3 The table below shows the cash flow projections of two proposed projects in a small production company. Both projects involve the acquisition of
Task 3 The table below shows the cash flow projections of two proposed projects in a small production company. Both projects involve the acquisition of new machinery. The figures for the projects are as follows Project Initial outlay Expected annual profits/losses (120,000) (120,000) Year 1 Year 2 Year 3 Year 4 Year 5 20,000 30,000 40,000 50,000 70,000 20,000 40,000 40.000 40,000 40.000 40,000 Estimated scrap value of machinery 15.000 The required rate of return on both projects has been established at 12%. The company uses a straight line method of depreciation for non-current assets to calculate operating profit
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