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Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for bot

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Payback Period NP-30= Years before recovery + Cost not covered in that year/ Cash flow for that year
=2+(670000-305000-305000)/305000=2.20
Payback Period NX-20= Years before recovery + Cost not covered in that year/ Cash flow for that year
=2+(740000-220000-242000-266200)/305000=3.04

IRR of NP-30 using financial calculator
CF0=-670000;CF1=305000;CF2=305000;CF3=305000;CF4=305000;CF5=305000;CPT IRR =35.59%

IRR of NX-20 using financial calculator
CF0=-740000;CF1=220000;CF2=242000;CF3=266200;CF4=292820;CF5=322102;CPT IRR =22.05%

PV of Cash flows =305000/(1+16%)+305000/(1+16%)^2+305000/(1+16%)^3+305000/(1+16%)^4+305000/(1+16%)^5
=998659.56
PI index of NP-30 =PV of Cash Flows/Initial Investment =998659.56/670000=1.491

PV of Cash flows =220000/(1+16%)+242000/(1+16%)^2+266200/(1+16%)^3+292820/(1+16%)^4+322102/(1+16%)^5
=855122.50
PI index of NX-20 =PV of Cash Flows/Initial Investment =855122.50/740000=1.156

NPV of NP-30 =PV of cash Flows -Initial Investment =998659.56-670000 =328659.76
NPV of NX-20 =PV of cash Flows -Initial Investment =855122.50-740000 =115112.50

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