Question

Project R requires an investment of $45,000 and is expected to produce after-tax cash inflows of $15,000 per year for five years. The cost of capital is 10 percent.
a. Determine the payback period, the net present value, and the profitability index for Project R. Is the project acceptable?
b. Now, assume that the appropriate risk-adjusted discount rate is 14 percent. Calculate the risk-adjusted net present value. Is the project acceptable after adjusting for its greater risk?
c. Calculate the approximate internal rate of return.


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  • CreatedMarch 27, 2015
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