Different and mutually exclusive investment opportunity

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Reference no: EM131509151

1. Suppose you have an investment opportunity that requires a $40,000 initial investment, but will repay you $20,000 over each of the next three years. Calculate the payback period and IRR. Assuming an interest rate of 6%, calculate the NPV.

2. Suppose you are given a different and mutually exclusive investment opportunity, one that requires the same initial investment of $40,000, but is estimated to pay out $10,000 the first year and $26,000 in each of the following two years. Compare this investment to the investment in Problem 1. Which is more attractive? If it depends on interest rates, explain how

Reference no: EM131509151

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