Calculate the investments internal rate of return

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Reference no: EM133432659

Question: Produktions bed riften AS is considering investing in a new machine for NOK 3,000,000. Transport and customs on the machine is supposed to be NOK 150,000, installation of the machine NOK 50,000. The machine has an economic life of 5 years, and then they believe that it can be sold for NOK 150,000. The company believes that the sale of products from machines gives an increased contribution to cover of NOK 1,200,000 per year. Fixed payable costs are calculated at NOK 100,000 per year. The company uses a calculated interest rate of 15%.

Prepare the cash flow for the relevant years.
What will be the investment's payback period ?
Calculate the present value of the investment and find out if it is profitable.
Calculate the investment's internal rate of return.

Reference no: EM133432659

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