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**Use cash flow projections below in answering question #'s 1-3** The following two mutually-exclusive business opportunities are currently under

**Use cash flow projections below in answering question #'s 1-3** 

  

  The following two mutually-exclusive business opportunities

  are currently under consideration by your firm, The Sharper

  Investor. The accounting department has forecasted pro forma

 cash flows for both projects accoding to the following table:

 (each project is to be funded to require a discount rate of 15%)


    Year        Cash Flow (A)       Cash Flow (B)   _

     0          -$525,000           -$60,000

     1             30,000             30,000

     2             75,000             15,000

     3             75,000              9,000

     4          1,125,000              3,000


1. Discounted payback of Project A (above) equals:


2. What is Project A's Internal Rate of Return (SHOW ALL WORK)?


  

3. The Profitability Index for Project B equals?


Can you show me the answer with all the working, thank you.

  

 

Top Answer

1.  Discounted payback  of Project A (above) equals: Discounted payback project is after 1st year cash flow how much time... View the full answer

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