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Tutorial   21152

The Ziggy Trim and Cut Company can purchase equipment on sale for $4,300. The asset has a three-year life, will produce a cash flow of $1,200 in the f...

Question:

The Ziggy Trim and Cut Company can purchase equipment on sale for $4,300. The asset has a three-year life, will produce a cash flow of $1,200 in the first and second year, and $3,000 in the third year. The interest rate is 12%. Calculate the project's payback. Also, calculate the project's IRR. Should the project be taken? Check your answer by computing the project's NPV. (Your answer should have Payback, IRR, and NPV listed as well as your answer.)