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Which project should be accepted by mr usman

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Reference no: EM132569208

Mr. Usman., has two investment proposals, which have the following characteristics:

Year          Net cash Flow           Net cash Flow

0                ($16,000)                 ($18,000)

1                  $5,000                 $5,000

2                  $4,000                   $5,000

3                  $3,000                     $8,000

4                $3500                     $4500

5                $1900                   $2400

Note: the cash flow at zero time periods are initial investments of the projects

Question 1: For each project, compute the followings:

Payback period

Net present value

Profitability index

Question 2: Using a discount rate of 15 percent. Which project should be accepted by Mr. Usman?

Reference no: EM132569208

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