this Question: 5 pts 12 of 44 (43 This Test: 100 pts IRR Rieger I with the propo

Question

this Question: 5 pts 12 of 44 (43 This Test: 100 pts IRR Rieger I with the proposal as shown in the following table The firm has a 8% cost of captal a. Calculate the payback period for the proposed investment b. Calculate the net present value (NP) for the proposed investment d. Evaluate the acceptability of the proposed a. The payback period of the proposed investment is years (Round to two decimal places) b. The NPV of the proposed investment is $(Round to the nearest cent.) e. The RR of the proposed investment, % (Round to two dean al places) Click to select your answerls) Type here to search 3 K L H

Explanation / Answer

Payback period is no. of years it takes to recover the initial investment.

NPV and IRR can be calculated using the same function on a calculator or excel.

As NPV > 0 and IRR > cost of capital, Reiger should accept the proposed investment.

Year CF 0 -86,000 1 30,000 2 30,000 3 25,000 4 35,000 5 20,000 Payback 4.03 NPV $26,681.46 IRR 19.57%

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