Weaknesses of the payback period method

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1. You are considering a project that has an initial outlay of $1million. The profitability index of the project is 2.24. What is the NPV of the project?

2. Identify the weaknesses of the payback period method.

3. Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $312,500. They project that the cash flows from this investment will be $121,450 for the next seven years. If the appropriate discount rate is 14 percent, what is the NPV for the project?

Reference no: EM132412348

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