Investment Projects (in €):Project Alpha:Initial Investment: €10,000Year 1: €2,000Year 2: €3,000Year 3: €4,000Year 4: €5,000Project...
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Accounting
Investment Projects (in €):- Project Alpha:
- Initial Investment: €10,000
- Year 1: €2,000
- Year 2: €3,000
- Year 3: €4,000
- Year 4: €5,000
- Project Beta:
- Initial Investment: €15,000
- Year 1: €3,000
- Year 2: €4,000
- Year 3: €5,000
- Year 4: €6,000
- Initial Investment: €10,000
- Year 1: €2,000
- Year 2: €3,000
- Year 3: €4,000
- Year 4: €5,000
- Initial Investment: €15,000
- Year 1: €3,000
- Year 2: €4,000
- Year 3: €5,000
- Year 4: €6,000
Required:
- Determine the payback period for each project.
- If the acceptable payback period is 3 years, which project would you choose?
- Calculate the NPV using a discount rate of 7%.
- Compute the IRR for both projects.
- Assess the profitability index (PI) for each project.
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