Inatech is contemplating two different projects and decides to perform a financial analysis to determine which...
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Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10% and an inflation rate of 4%. Compute the payback in years and the net present value for both projects and offer advice as to the best course of action. (4 marks) Year 0 1 2 3 4 5 A -$100,000 $50,000 $15,000 $50,000 $75,000 $500,000 B -$400,000 $90,000 $50,000 $150,000 $200,000 $750,000 Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10% and an inflation rate of 4%. Compute the payback in years and the net present value for both projects and offer advice as to the best course of action. (4 marks) Year 0 1 2 3 4 5 A -$100,000 $50,000 $15,000 $50,000 $75,000 $500,000 B -$400,000 $90,000 $50,000 $150,000 $200,000 $750,000
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a payback period of A 2 3000050000 26 years payback ... View the full answer
Related Book For
Managerial Economics Theory Applications and Cases
ISBN: 978-0393912777
8th edition
Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield
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