An investment has an installed cost of $517,800. The cash flows over the four-ye

Question

An investment has an installed cost of $517,800. The cash flows over the four-year life of the investment are projected to be $231,850, $248,450, $215,110, and $163,820.

If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.)

If the discount rate is infinite, what is the NPV? (Negative amount should be indicated by a minus sign.)

At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.)

Explanation / Answer

Year 0 1 2 3 4 Cashflow -517800 231850 248450 215110 163820 NPV 341430 Year 0 1 2 3 4 Cashflow -517800 231850 248450 215110 163820 Infinite discount rate -517800 0 0 0 0 NPV -517800 Discount rate 25.4480% Year 0 1 2 3 4 Cashflow -517800 231850 248450 215110 163820 Discount cash flow -517800 184817.6 157874.3 108960.6 66147.27 NPV -0.21083 At 25.448 NPV IS 0

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