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NPV and Other Investment Criteria

The XYZ Manufacturing Company is considering the below investment proposal. The initial investment is $100,000. It was an expected economic life of 10 years. The net cash flow in the initial year is expected to be $25,000 and annual net cash flow is expected to develop at the rate of 10% per year. The cost of capital is 5%.

(a) Determine the payback period?

(b) Determine the discounted payback period?

(c) Determine the net current value of the project?

(d) Determine the profitability index of the project?

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