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Ren-Tex Equipment rental is performing a financial study to determine the viability of constructing a new...

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Finance

Ren-Tex Equipment rental is performing a financial study todetermine the viability of constructing a new equipment rental andmaintenance facility in Dallas. The management team has estimatedthe new facility will initially cost $4,000,000 and have positivecash flows of $400,000 in year 1, $700,000 in year 2, and $600,000years 3 through 7. The required discount rate is 7% over the 7 yearlife of the facility.

A) Calculate the Net Present Value (NPV).

B) Calculate the Profitability Index (PI).

C) Calculate the Internal Rate of Return (IRR).

D) Should this project be accepted?

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Ren-Tex Equipment rental is performing a financial study todetermine the viability of constructing a new equipment rental andmaintenance facility in Dallas. The management team has estimatedthe new facility will initially cost $4,000,000 and have positivecash flows of $400,000 in year 1, $700,000 in year 2, and $600,000years 3 through 7. The required discount rate is 7% over the 7 yearlife of the facility.A) Calculate the Net Present Value (NPV).B) Calculate the Profitability Index (PI).C) Calculate the Internal Rate of Return (IRR).D) Should this project be accepted?

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