Question

Use the NPV method to determine whether Salon Products should invest in the following projects:
• Project A costs $272,000 and offers eight annual net cash inflows of $60,000. Salon Products requires an annual return of 14% on projects such as this one.
• Project B costs $380,000 and offers nine annual net cash inflows of $70,000. Salon Products demands an annual return of 12% on investments of this nature.
Requirement
What is the NPV of each project? What is the maximum acceptable price to pay for each project?


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  • CreatedApril 30, 2015
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