Purchase Solution

# Walker Landscaping Company end of year cash flows

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The Walker Landscaping Company can purchase equipment on sale for \$3,200. The asset has a two-year life, will produce a cash flow of \$800 in the first year, and \$3,000 in the second year. The interest rate is 15%. REQUIRED: 1) Assuming end of year cash flows, calculate the project's: a) the project's payback, b) IRR and c) NPV. 2) Should the project be undertaken? Why or why not?

##### Solution Summary

This solution is comprised of a detailed explanation to calculate the project's: a) the project's payback, b) IRR and c) NPV and answer whether the project should be undertaken.

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End of year cash flows
The Walker Landscaping Company can purchase equipment on sale for \$3,200. The asset has a two-year life, will produce a cash flow of \$800 in the first year, and \$3,000 in the second year. The interest rate is 15%. REQUIRED: 1) Assuming end of year cash flows, calculate the project's: a) the project's payback, b) IRR and c) NPV. 2) Should the project be undertaken? Why or why not?

a) the project's payback
Payback period is defined as the expected number of years required to ...

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