Project Financial Analysis (in €):Project X:Initial Cost: €12,000Year 1: €4,000Year 2: €5,000Year 3: €6,000Year 4:...
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Accounting
Project Financial Analysis (in €):- Project X:
- Initial Cost: €12,000
- Year 1: €4,000
- Year 2: €5,000
- Year 3: €6,000
- Year 4: €7,000
- Project Y:
- Initial Cost: €10,000
- Year 1: €3,000
- Year 2: €4,500
- Year 3: €5,500
- Year 4: €6,500
- Initial Cost: €12,000
- Year 1: €4,000
- Year 2: €5,000
- Year 3: €6,000
- Year 4: €7,000
- Initial Cost: €10,000
- Year 1: €3,000
- Year 2: €4,500
- Year 3: €5,500
- Year 4: €6,500
Required:
- Calculate the payback period for each project.
- Which project would you choose if the standard payback period is 3 years?
- Compute the discounted payback period at a discount rate of 8%.
- Determine the NPV for each project using a discount rate of 8%.
- Compute the profitability index (PI) for both projects.
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