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The Walker Landscaping Company can purchase a piece of equipment for $3,600. The asset has a two-year life, will produce a cash flow of $600 in the…

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The Walker Landscaping Company can purchase a piece of equipment for $3,600. The asset has a two-year life, will produce a cash flow of $600 in the first year and $4,200 in the second year. The interest rate is 15%. Calculate the project’s Discounted Payback and Profitability Index assuming steady cash flows. Should the project be taken? If the Average Accounting Return was positive, how would this affect your decision?

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