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QUESTION 3 CAPITAL BUDGETING (60 MARKS) The owners of Farco Incorporated have a dilemma....

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Finance

QUESTION 3 CAPITAL BUDGETING (60 MARKS)
The owners of Farco Incorporated have a dilemma. They plan to expand their subsidiaries; however, they currently have the resource to expand only one. Given the discount rates and the future cash flow of each project listed in the following table, answer the questions below and help the owners to make the most viable decision.
Required:
a. Compute the payback period for each project (12 marks)
b. Assess the decision rule for the payback method. (3 marks)
c. Compute the discounted payback period for each project using a discount rate of 10%.
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