An investment has an installed cost of $531,800. The cash flows over the four-year life of the investment are projected...
An investment has an installed cost of $531,800. The cash flows over the four-year life of the investment are projected to be $217,850, $234,450, $201,110, and $149,820.
If the discount rate is zero, what is the NPV? (Omit $ sign in your response.)
NPV $ ______
If the discount rate is infinite, what is the NPV? (Negative answer should be indicated by a minus sign. Omit $ sign in your response.)
NPV $ ______
At what discount rate is the NPV just equal to zero? (Round the final answer to 2 decimal places.)
IRR ______%
Show calculation expressions and the trial-and-error process for all figures.
Homework Answers
a.
NPV = -531,800 + 217,850 + 234,450 + 201,110 + 149,820
NPV = $271,430
b.
NPV = -531,800, as rate is infinite
c.
Calculating IRR,
Using Trial and Error Method,
IRR = 20.12%
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