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Why should duncombe pursue the investment

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Reference no: EM131749618

Problem: Investment Decision

Analyze the following scenario: Duncombe Village Golf Course is considering the purchase of new equipment that will cost $1,200,000 if purchased today and will generate the following cash disbursements and receipts. Should Duncombe pursue the investment if the cost of capital is 8 percent? Why? Clearly label your calculations in your analysis.

Year

Cash Receipts

Cash Disbursements

Net Cash Flow

1

1,000,000

500,000

500,000

2

925,000

475,000

450,000

3

800,000

450,000

350,000

4

750,000

430,000

320,000

Reference no: EM131749618

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