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The following data is available for project A and B Machine A Machine B Cost of machine 100,000 60,000 Expected Profits 1 29,000 18,000 2
The following data is available for project A and B Machine A Machine B Cost of machine 100,000 60,000 Expected Profits 1 29,000 18,000 2 (1,000) (2,000) 3 2,000 4,000 Residual value 7,000 6,000 The firm has an estimated cost of capital of 10% and employs the straight line method of depreciation for all fixed assets. For each of the machines, calculate and comment on your findings about the proposed investments: (i) Payback Period (1) Discounted Payback (iii) Net Present Value (iv) Internal Rate of Return (v) Profitability Index
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