Omega Enterprises is reviewing two potential projects. Both require an initial investment of JPY 5,000,000....
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Accounting
Omega Enterprises is reviewing two potential projects. Both require an initial investment of JPY 5,000,000. The expected cash inflows are as follows:
Year
Cash Flows (Project C)
Cash Flows (Project D)
Initial Investment
(5,000,000)
(5,000,000)
1
1,500,000
1,000,000
2
1,500,000
2,000,000
3
1,000,000
2,500,000
4
1,000,000
3,000,000
Requirements: a. Compute the payback period for both projects. b. Calculate the NPV for each project if the cost of capital is 6%. c. Which project should Omega Enterprises invest in based on the NPV criterion?
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