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What is the internal rate of return of the given investment

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Reference no: EM131819866

Problem

Harry Corp buys equipment for $224,888 that will last for 9 years. The equipment will generate cash flows of $36,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 10% required rate of return.

(a) What is the Present Value (PV) of this investment (at 10%)?.

(b) What is the NET Present Value (NPV) of this investment? If you need 10%, should you buy the equipment?

(c) What is the Internal Rate of Return (IRR) of this investment?

(d) What is the payback period?

Reference no: EM131819866

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