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Suppose Palmer Properties is considering investing $1 million today (i.e., C0 =-1,000,000) on a new project that is expected to last for 10 years. The project is expected to generate annual cash flows of C1 = -250,000; C2 = 150,000, C3 = 200,000 and then $250,000 for period C4 through C10. If the discount rate is 9% and management's payback period cutoff is 6 years:

(a) What is the payback period for the project? Show your work

(b) What is the net present value of the project ? Show your work

(d) Under which method(s) above should the company accept the project (applying the acceptance rules)? Explain.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9859840

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