A) Net Present Value and Profitability Index using straight-line depreciation; B) Net Present Value and Profitability Index
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Question:
A) Net Present Value and Profitability Index using straight-line depreciation;
B) Net Present Value and Profitability Index using double declining depreciation. Please show some work.
Investment cost is 550,000
Gross cash inflows for 5 years are: Year 1: 90,000 Year 2: 130,000 Year 3: 160,000 Year 4:
190,000 Year 5: 250,000
The cost of money is 12%
No salvage value
Estimated Tax rate for all years is 25%
Using straight-line depreciation
Cash inflows occur at end of each year.
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