The value of quantitative methods for project

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Intermediate Accounting: Reporting and Analysis
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Chapter 21 / Exercise M21-2
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
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10. The value of quantitative methods for project evaluation:Business organizations have new project ideas all the time, not only to grow but to at least stay with competition. So to determine “to invest or not to” is unavoidable task on a regular basis. The question is how to make this determination. Should we invest in a project simply because it “sounds good” or “feels good?” Can a business, especially a small business afford to risk a significant amount of money on a project simply because it sounds good or feels good? There’s got to be a better approach.
making such an error if we adopt or reject a project based on how it sounds or feels?
Problems1.Your company is considering the following project:YearCash Flow0-$14,00018,00026,00032,00043,00056,000
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Intermediate Accounting: Reporting and Analysis
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Chapter 21 / Exercise M21-2
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
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1)Compute the payback period, discounted payback period, NPV, and IRR for this project.

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