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Sampdoria General Company (SGC) is considering a five-year investment which costs $100,000 today. The investment will produce cash flows of $25,000 each year for the first two years, $50,000 a year for each of the remaining three years. (SGC) uses the following criterions in its capital budgeting process:

WACC = 12%

Target Payback Period (PBP) = 2.00 years

Target Discounted Payback Period (DPBP)= 2.50 years

Target Accounting Rate of Return (ARR) =25%

Please use the following capital budgeting techniques to prepare a table to summarize your results and provide a short paragraph comment/interpretation about your findings.

1) Accounting Rate of Return

2) NPV

3 IRR

4) MIRR

5) PI

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Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92258941

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