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The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However,6. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps inYear o -$5,000,000 Year 1 $2,000,000 Year 2 $4,250,000 Year 3 $1,750,000 Cash flow Discounted cash flow Cumulative discounted

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Year 1 Cash flows $350,000.00 $0.00 $400,000.00 $475,000.00 FV of the cash inflows Fv @ 10% 1.33 1.21 1.10 Future value $465,

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