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Please do all the questions, and show the work. Thanks.Â
1. Hong Kong Inc., imposes a payback cutoff of three years for its projects. If the company has the following two projects available, should it accept either of them? Assume cash flows occur evenly throughout the years. Year Cash Flow (A) Cash Flow (B)
-$50,000
11,000 1 5,000
24,000 270,000 2. A project has annual cash inflows of $4,200, $5,300, $6,100, and $7,400 for the next four years, respectively
and a discount rate of 10 percent. What is the discounted payback period for these cash flows if the initial cost is $6,500? What if it is $12,900? Assume cash flows occur evenly throughout the years. 3. For the below cash flows, suppose the firm uses the NPV decision rule. At a required return of 11 percent, should the firm accept this project? What if the required return is 25 percent? Cash Flow -$32,000
16,000 20,000
17,000 4. Taiwan, Inc., has identified the following two mutually exclusive projects: YearÂ
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