Calculate the net present value for the proposed investment

Assignment Help Financial Management

Reference no: EM131586028

Rieger International is attempting to evaluate the feasibility of investing $78,000 in a piece of equipment that has a 55-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table:

year (#) Cash inflows ($)

1. $35,000

2. $20,000

3. $30,000

4. $20,000

5. $25,000

The firm has a 88 % cost of capital.

a. Calculate the payback period for the proposed investment.

b. Calculate the net present value (NPV) for the proposed investment.

c. Calculate the internal rate of return (IRR), rounded to the nearest whole percent, for the proposed investment.

d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project?

a. The payback period of the proposed investment is nothing years. (Round to two decimal places.)

b. The NPV of the proposed investment is $ nothing. (Round to the nearest cent.)

c. The IRR of the proposed investment is nothing?%. (Round to two decimal places.)

d. Should Rieger International accept or reject the proposed investment (Select the best answer below.)

Reference no: EM131586028

Questions Cloud

Calculate the terms of the sequence of numbers : Calculate the terms of the sequence of numbers: 0 1 2 5 12 29 ... where each term of the sequence is twice the previous term plus the second previous

Find the delta of the call and put options : Find the delta of the call and put options.

Describe safety issues involved in a crisis disorder : The goal for people experiencing a crisis is to return to the pre-crisis level of adaptation. Thoroughly describe safety issues involved in a crisis disorder

Select a motivational theory : From the following list, select a motivational theory that you would be most likely to apply as a manager.

Calculate the net present value for the proposed investment : Calculate the payback period for the proposed investment. Calculate the net present value (NPV) for the proposed investment.

How the policy influences some or all of the realms explored : As this is a cumulative examination, your analysis must include how the policy influences some or all of the realms explored this semester.

Case law and legislation to answer question adequately : Discuss whether both the $400,000 and the $100,000 receipts are assessable income.

Are my paragraphs arranged logically : Is my thesis statement strong, and does it effectively tell the main idea of the essay? Did I underline my thesis statement?

Selling items in bulk or large packaging : Why is it important to take this single factor into account when launching a new product for a Latin American consumer?

User Account

All Pages