Assume that it costs $1000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year, find the pay back period. Now assume that the interest rate is 10%, find the net present value (NPV) and the profitable index (PI) for this project.

Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
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Assume that it costs $1000 to start a project. If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year, find the pay back period.

Now assume that the interest rate is 10%, find the net present value (NPV) and the profitable index (PI) for this project.

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