Prepare the incremental cash flow table

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Prepare the incremental cash flow table (which incorporates taxes and includes initial investment, operating and terminal cash flows) for the project over the eight years based on the "most likely" sales projection of 1,650,000 pounds per year in Exhibit 1. Based on your estimated after-tax net cash flows, calculate the payback period, NPV, internal rate of return (IRR) and profitability index (PI) of this project. Assume ABC uses a payback rule with cut-off period of five years and the appropriate after-tax discount rate is the company's cost of capital. Should the project be undertaken based on each of the investment evaluation methods?

Reference no: EM133001894

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