Calculate and determine if capital budget project is viable, Managerial Accounting

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Calculate and determine if capital budget project is viable

Problem

Using the IRR or NPV method, calculate and determine if the following capital budget project is viable: Project Cost $2 million, Project Life 10 years, and Cost of Capital 15%.

a) Your company expects to save $450,000 per year for the next 10 years by purchasing the item.
b) The cost of capital is 15%.
c) The company believes its initial investment will be $2 million.

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Managerial Accounting: Calculate and determine if capital budget project is viable

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Managerial Accounting: Calculate and determine if capital budget project is viable

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