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What is the NPV of each project

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Question - Using NPV and profitability index to make capital investment decisions Use the NPV method to determine whether Kyler Products should invest in the following projects:

Project A: Costs $260,000 and offers seven annual net cash inflows of $57,000. Kyler Products requires an annual return of 16% on investments of this nature.

Project B: Costs $375,000 and offers 10 annual net cash inflows of $75,000. Kyler Products demands an annual return of 14% on investments of this nature.

Requirements -

1. What is the NPV of each project? Assume neither project has a residual value.

2. What is the maximum acceptable price to pay for each project?

3. What is the profitability index of each project?

Reference no: EM132012607

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