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    Net present value and profitability index

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    Please help with the following solution with step by step calculations.

    Calculate the net present value and profitability index of an uneven cash flow.

    Investment A

    Initial Investment is $180,325

    Net cash flow

    year 1 = $45,000
    year 2 = $50,000
    year 3 = $82,295
    year 4 = $86,400
    year 5 = $64,000

    Investment B

    Initial Investment is $150,960

    Net cash flow

    year 1 = $35,000
    year 2 = $52,000
    year 3 = $58,000
    year 4 = $75,000
    year 5 = $29,000

    There is a 10% return on investment. Explain which investment I would like to consider and why.

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    Solution Preview

    Problems: Calculate the net present value and profitability index of an uneven cash flow. There is a 10% return on investment. Explain which investment I would like to consider and why.

    Solution:
    NPV = PV of cash flows - initial ...

    Solution Summary

    The solution explains the calculation of net present value and profitability index of an uneven cash flow based on the information given about investments. Step by step calculations are provided in the solution along with explanations.

    $2.19