Purchase of new pleasure boat for his tourist business

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Reference no: EM132040945

1. What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business? The expected cash flows appear below. (note: payback is in years; round to 2 decimals)

Year 0 cash flow = -8,600,000

Year 1 cash flow = 4,100,000

Year 2 cash flow = 3,800,000

Year 3 cash flow = 3,200,000

Year 4 cash flow = 4,000,000

Year 5 cash flow = 2,200,000

Year 6 cash flow = 3,900,000

2. A colleague asks for your help in finding the discount rate where the NPV=0 for a set of cash flows. You quickly recall that this is the IRR for a project. Answer in %, rounding to 2 decimals.

Year 0 cash flow = -116,000

Year 1 cash flow = 40,000

Year 2 cash flow = 32,000

Year 3 cash flow = 45,000

Year 4 cash flow = 39,000

Reference no: EM132040945

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