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Ren-Tex Equipment rental is performing a financial study todetermine the viability of constructing a new equipment rental andmaintenance facility in Dallas. The management team has estimatedthe new facility will initially cost $4,000,000 and have positivecash flows of $400,000 in year 1, $700,000 in year 2, and $600,000years 3 through 7. The required discount rate is 7% over the 7 yearlife of the facility.A) Calculate the Net Present Value (NPV).B) Calculate the Profitability Index (PI).C) Calculate the Internal Rate of Return (IRR).D) Should this project be accepted?
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