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# CH8 - 8 \$4,530.81 Accept 24-\$1,234.17 Decline IRR = 19.18...

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1. Payback period = 2.73 years = (800/1,100) + 2 Year Cash Flow Remaining 0 - \$4,500 =4,500 1 1,300 (4,500-1,300) = 3,200 2 2,400 (3,200-2,400) = 800 3 1,100 (800-1,100) =-300 4 800 2. A Payback period = 3.68 years = 3 + (625/925) B Payback period = 4.81 years = 4 + (725/925) C Payback period = never = 8,400 > 7,400 or 925 * 8 A B C Year Cash Flow Remainin g Cash Flow Remainin g Cash Flow Remaining 0 -\$3,400 \$3,400 -\$4,450 \$4,450 -\$8,400 \$8,400 1 925 2,475 925 3,525 925 7,475 2 925 1,550 925 2,600 925 6,550 3 925 625 925 1,675 925 5,625 4 925 -300 925 750 925 4,700 5 925 925 -175 925 3,775 6 925 925 925 2,850 7 925 925 925 1,925 8 925 925 925 1,000 5. IRR = 16.02 > 13% required return Yes the firm should accept the project 7. I NPV Decision

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Unformatted text preview: 8% \$4,530.81 Accept 24%-\$1,234.17 Decline IRR = 19.18% Indifferent 8. IRR = 15.84% 9. I NPV 0% \$10,300.00 10% \$3,253.19 20%-\$2,018.52 30%-\$6,074.65 13. PI Calculation I PV 1.157 32,394.44/28,000 10% \$32,394,44.00 1.069 29,945.43/28,000 15% \$29,945.43 .965 27,024.44/28,000 22% \$27,024.44 16. M N A. IRR 31.84% 25.12% B. NPV \$51,533.10 \$69,194.11 C. The company could benefit from both projects; however, if selecting only one then project N would be the better choice because it has a higher NPV and IRR can be deceiving when comparing two exclusive projects....
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