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An investment costing 200000 will reduce operating costs by

Question - An investment costing $200,000 will reduce operating costs by $35,000 per year for 12 years. The required rate of return is 18%.

1) Determine the internal rate of return on the investment, ignore taxes.

2) Determine the net present value of the investment, ignore taxes.

3) Should the investment be undertaken? Why?

4) Show all calculations and support your investment decision with calculations.

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