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Question 2 Consider the following cash flows of a new project for the Bahamas Recreation Corp (BRC). The required annual return is 14%. Year Deepwater Fishing $750,000 310,000 430,000 330,000 0 Compute the NPV and payback period of this project.

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Computation of Net Present value and Payback Period of Proiect:- Cash Year Flows (S PVF @ 14% Present Cumulative Value $ Cashflows $ S 750,000) 1.0000 (750,000) 0.8772 271,930 330,871 330,000 0.6750 222,741 75,541 (750,000) (440,000) (10,000) 320,000 310,000 430,000 0.7695 Net Present Value (NPV) NPV of the Project is S 75,541/. Approx. Payback period is 2 years (10000/330000) Payback period is - 2.03 years Approx.

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