A company is considering two expansion projects:Project Gamma:•Initial Cost: $7,000,000•Yearly Inflows: $2,000,000 for 5 yearsProject...
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Accounting
A company is considering two expansion projects:
Project Gamma:
•Initial Cost: $7,000,000
•Yearly Inflows: $2,000,000 for 5 years
Project Delta:
•Initial Cost: $6,000,000
•Yearly Inflows: $1,800,000 for 5 years
Requirements:
1.Calculate the NPV for both projects with a discount rate of 9%.
2.Compute the IRR for each project.
3.Determine the payback period for each project.
4.Decide which project is more financially viable based on the calculated NPVs and IRRs.
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