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Emily’s Napkins and Accessories, Inc. is considering making an investment in a new production machine. The...

Emily’s Napkins and Accessories, Inc. is considering making an investment in a new production machine. The firm has estimated that the machine has a useful life of three years. At the end of the three years, you expect all of your investment to be worthless. The total investment required to open this enterprise is $12,000. Your after–tax cash flow is expected to be $3,000 per year and your required rate of return for this project is 12 percent.

A.What is the Pay back Period in years?

B. What is the NPV for the Project?

C. What is the Profitability Index?

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Answer #1

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