Determine the payback for the new dialysis unit


Buxton Community is expecting its new dialysis unit to generate the following cash flows:

Givens

Years

0

1

2

3

4

5

Initial investment

 

(10,000,000)

 

 

 

 

 

Net Operating Cash flows

 

 

1,500,000

2,000,000

4,000,000

7,000,000

14,000,000

a. Determine the payback for the new dialysis unit

b. Determine the NPV using a cost of capital of 11%

c. Determine the NPV at cost of capital of 20% and compute the IRR

d. At an 11% cost of capital, should the project be accepted?

At a 20% cost of capital, should the project be accepted? Explain.

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Finance Basics: Determine the payback for the new dialysis unit
Reference No:- TGS0551227

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