Suppose you are given the following information about cash flows for an investment opportunity (5 Marks):...

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Suppose you are given the following information about cash flows for an investment opportunity (5 Marks): Year 0 1 2 3 Cash flow (€) -14,000 7,300 6,900 5,700 a) What is the discounted payback period for the above project if the relevant discount rate is 10 per cent? b) What is the profitability index for the project if the relevant discount rate is 10 per cent? c) What is the profitability index if the discount rate change to 15 per cent or 22 per cent? Suppose you are given the following information about cash flows for an investment opportunity (5 Marks): Year 0 1 2 3 Cash flow (€) -14,000 7,300 6,900 5,700 a) What is the discounted payback period for the above project if the relevant discount rate is 10 per cent? b) What is the profitability index for the project if the relevant discount rate is 10 per cent? c) What is the profitability index if the discount rate change to 15 per cent or 22 per cent?

Answer rating: 100% (QA)

a To calculate the discounted payback period we need to find the point in time at which the sum of t... View the full answer