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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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