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A retail chain is planning to launch a new store. The expected cash flows are:Initial...

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Accounting

A retail chain is planning to launch a new store. The expected cash flows are:

  • Initial outlay: $3,500,000
  • Year 1: $1,000,000
  • Year 2: $1,200,000
  • Year 3: $1,400,000
  • Year 4: $1,600,000

The company's discount rate is 10%.

  • Calculate the NPV of the new store.
  • Determine the IRR.
  • Calculate the Modified Internal Rate of Return (MIRR).
  • Should the company go ahead with the project if their minimum acceptable IRR is 12%?
  • Compute the discounted payback period.

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