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You are tasked with evaluating a riskier than average capital budgeting project with the following cash flows The project will initially cost $5700 In Year 1 there will be a cash inflow of

You are tasked with evaluating a riskier-than-average capital budgeting project with the following cash flows The project will initially cost $5,700 In Year 1, there will be a cash inflow of $2,000 In Year 2 there will be a cash inflow of $3,000 In Year 3 there will be a cash inflow of $2,000 The company has a WACC of 10% They add 3% to WACC for risky projects and they subtract 3% from WACC for less risky projects

 

a What is this project’s NPV? Accept or reject?

b Calculate this project’s Profitability Index Accept or reject?

c What is this project’s discounted payback period?

d What is this project’s payback period?

 

 

Apr 29 2020 View more View Less

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