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XYZ Ltd. plans to invest in a project with an initial cost of $700,000. The project will yield annual cash inflows of $140,000 for six

  • XYZ Ltd. plans to invest in a project with an initial cost of $700,000. The project will yield annual cash inflows of $140,000 for six years. Calculate the payback period, net present value (NPV) at 14%, internal rate of return (IRR), and profitability index (PI).

ยทMulti-Year Project Evaluation

  • An initial investment of $350,000 is required for a project. The project will generate net inflows as follows:
    • Year 1: $80,000
    • Year 2: $90,000
    • Year 3: $100,000
    • Year 4: $120,000
    • Year 5: $130,000
  • Requirements:
    • Determine the payback period.
    • Calculate the net present value (NPV) at a discount rate of 10%.
    • Find the internal rate of return (IRR).
    • Compute the accounting rate of return (ARR).

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