Question 9 (8% total) Jules Company is considering making an…
Question 9 (8% total) Jules Company is considering making an investment in a new project. Jules’ discount rate is 8%. Details on the project are provided below. Please calculate the project’s Simple payback period Discounted payback period The project is a 5-year project that involves an upfront investment of $30,000, and initial working capital of $10,000. Existing equipment will be replaced with upgraded versions and sold for $2,000. The upgraded equipment will be sold after year 5 for $5,000. The project is expected to improve Jules’ gross margin by $9,500 in year 1, improving by 5% each year thereafter. The working capital will be returned at project conclusion.