An investment that costs $200,000 will reduce operating costs by $35,000 per year for 12 years. Determine the internal rate of return of the investment (ignore taxes). Should the investment be undertaken if the required rate of return is 18 percent. Can yall show me the steps to find this.
YEAR |
CASH FLOW |
PV FACTOR (18%) |
PV OF CASH FLOW |
0 |
(200000) |
1 |
(200000) |
1-12 |
35000 |
4.79322 |
167763 |
NPV |
(32237) |
SINCE NET PRESENT VALUE IS NEGATIVE , THE INVESTMENT SHOULD NOT BE UNDERTAKEN.
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An investment that costs $200,000 will reduce operating costs by $35,000 per year for 12 years....
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