Analyzing the cost of capital

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Reference no: EM13748499

Analyze the following scenario: Duncombe Village Golf Course is considering the purchase of new equipment that will cost $1,200,000 if purchased today and will generate the following cash disbursements and receipts. Should Duncombe pursue the investment if the cost of capital is 8 percent? Why? Clearly label your calculations in your analysis.

Year	Cash Receipts	Cash Disbursements	Net Cash Flow
1	1,000,000	500,000	500,000
2	925,000	475,000	450,000
3	800,000	450,000	350,000
4	750,000	430,000	320,000

Reference no: EM13748499

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