GHI Enterprises is considering selecting between two projects. The company's cost of capital is 12%...
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Accounting
- GHI Enterprises is considering selecting between two projects. The company's cost of capital is 12% and the tax rate is 33%. Other information related to both projects is as follows:
Particulars | Project 1 | Project 2 |
Investment Required | 2,000,000 | 2,500,000 |
Expected life | 7 years | 7 years |
Annual Cash Flow (before Tax) | 450,000 | 600,000 |
- Depreciation is charged on a straight-line basis. You are required to calculate: a. Discounted payback period b. NPV c. Profitability index d. Payback period
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