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You are offered an asset that costs $14,000 and has cash flows as follows below at the end of each quarter for the next 8 years. Then it will be sold for $2,500. Your cost of capital is 6.5 percent. An alternative (mutually exclusive) project is available which offers an accounting rate of return of 8%, a classical payback period of 5 years and a discounted payback period of 5 years. Year 1: $800 each quarter Year 2: $850 each quarter Year 3: $850 each quarter Year 4: $950 each quarter Year 5: $800 each quarter Year 6: $600 each quarter Year 7: $500 each quarter Year 8: $400 each quarter

What are the PI and NPI of the asset?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92762700

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