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    NPV & the payback rule

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    The following projects are being considered by the Corporate Investment Committee who has an investment budget of $1,000,000. Project approval will be granted if the payback is achieved within 3 years. Which ones will be funded?.

    Project Length of project Up Front Investment Annual Cost each Year Annual Benefits

    A 3 $250,000 $15,000 $100,000
    B 6 $500,000 0 $120,000
    C 4 $300,000 $40,000 $150,000
    D 5 $400,000 $80,000 $200,000
    E 3 $175,000 $180,000 $250,000

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    https://brainmass.com/business/finance/npv-payback-rule-279122

    Solution Summary

    NPV and the payback rule are assessed in terms of which projects will be funded. The solution is provided using an Excel spreadsheet attached.

    $2.19

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