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USUS, Inc. is considering a project that would have a 10-year life and would require a $1,000,000 nvestment in equipment. At the end of 10
USUS, Inc. is considering a project that would have a 10-year life and would require a $1,000,000 nvestment in equipment. At the end of 10 years, the project would terminate and the equipment would have n alvage value. The project would provide net income each year as follows: Sales Less variable expenses Contribution margin Less fixed expenses Net income 2,000,000 1,400,000 600,000 400,000 200,000 All of the above items, except for depreciation of $100,000 a year, represent cash flows. The company's equired rate of return in 12%. EQUIRED: (A) Compute the project's net present value (B) Compute the project's internal rate of return, interpolating to the nearest tenth of a percent. (C) Compute the project's payback period. (D) Compute the project's simple rate of return
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