Question

1) Sue was presented with a capital expenditure for a new air conditioning unit which costs...

1) Sue was presented with a capital expenditure for a new air conditioning unit which costs $12,000 today and would generate the following savings.

Year Amount

1 $2,000

2 $3,000

3 $2,000

4 $4,000

5 $5,000

6 $7,500

7 $5,000

8 $2,500

If the appropriate discount rate is 8 percent, what is the NPV and the IRR for this outlay?

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