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Webster's wants to introduce a new product that has a startup cost of $15,000. The product has a 2-year life and will provide cash flows
Webster's wants to introduce a new product that has a startup cost of $15,000. The product has a 2-year life and will provide cash flows of $12,700 in Year 1 and $6,300 in Year 2. The required rate of return is 10 percent. Should the product be introduced? Why or why not?
A. No; The PI is .90.
B. Yes; The IRR is 19.74 percent.
C. Yes; The NPV is $851.24.
D. Yes; The PI is 1.04.
E. No; The IRR is 8.78 percent.
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