Q3. A project has the following cash flow with a discount rate of 12%: Annual cash flows:
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Q3. A project has the following cash flow with a discount rate of 12%: Annual cash flows:
Year 0 | $ -520,000 |
Year1 | $170,000 |
year2 | $ 210,000 |
year3 | $ 225,000 |
Year4 | $ 195,000 |
$520,000 is used in purchasing an equipment for the project only.
Compute the following:
A. Payback period;
B. Discounted Payback period;
C. NPV;
D. Profitability Index;
E. Average Accounting Return, assuming that the cash flow shown is the income before tax and depreciation and ignoring the tax effects.
F. Should the project be accepted. Explain.
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
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