Siemens AG invests €80 million to build a manufacturing plant to build wind turbines. The company predicts net cash flows of €16 million per year for the next eight years. Assume the company requires an 8% rate of return from its investments. 1. What is the payback period of this investment? 2. What is the net present value of this investment?

Principles of Accounting Volume 2
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ISBN:9781947172609
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Chapter11: Capital Budgeting Decisions
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Siemens AG invests €80 million to build a manufacturing plant to build wind turbines. The company
predicts net cash flows of €16 million per year for the next eight years. Assume the company requires an
8% rate of return from its investments.
1. What is the payback period of this investment?
2. What is the net present value of this investment?

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