Question: You are evaluating a project that will cost $500,000, but is expected to produce cash flows of $125,000 per year for 10 years, with the

You are evaluating a project that will cost $500,000, but is expected to produce cash flows of $125,000 per year for 10 years, with the first cash flow in one year. Your cost of capital is 11% and your company's preferred payback period is three years or less.

a. What is the payback period of this project?

b. Should you take the project if you want to increase the value of the company?

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a The payback period is four years 4 125000 500000 b As ... View full answer

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