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1. The WedLink Company is considering the possibility of developing a new wedding planning website. The cost of development is assumed to be $250,000 and the company expects to generate after-tax cash flows of $70,000 per year for the next 5 years from subscribers. If the firm’s discount rate is 12%, the NPV of this project is

2. Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistics for the project are 2.0 and 3.0 years, respectively. Time: 0 1 2 3 4 5 6 Cash flow –$7,600 $1,190 $2,390 $1,590 $1,590 $1,390 $1,190 Use the PI decision rule to evaluate this project.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92753663

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