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PROFIBITABILITY INDEX and THE PAYBACK PERIOD

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Jones Brothers require a 14 percent rate of return

Year A B
0 -30,000 -60,000
1 10,000 20,000
2 10,000 20,000
3 10,000 20,000
4 10,000 20,000
5 10,000 20,000

A.COMPARE THE NPV OF BOTH PROJECTS

B COMPARE THE INTERNAL RATE OF RETURN ON BOTH PROJECTS

C COMPARE THE PROFITABILITY INDEX OF BOTH PROJECTS

D COMPARE THE PAYBACK PERIOD OF BOTH PROJECTS

E WHICH OF THE TWO PROJECTS, IF EITHER, SHOULD JONES BROTHERS ACCEPT AND WHY?

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Solution Summary

Response explains the steps to compute the profitability index, IRR and NPV and the payback period.

Solution Preview

Refer to attached Excel file.

Jones Brothers require a 14 percent rate of ...

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