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Winter Fun Company is evaluating a capital expenditure proposal that requires an initial investment of $66,338,...

Winter Fun Company is evaluating a capital expenditure proposal that requires an initial investment of $66,338, has predicted cash inflows of $15,000 per year for seven years, and has no salvage value. a. Using a discounted rate of 14 percent, determine the net present value of the investment proposal. Use a negative sign with your answer, if appropriate. $Answer 0 b. Determine the proposal's internal rate of return. (Refer to Appendix 25B if you use the table approach.) Round to the nearest percent. (Example: 0.1568 = 15%) Answer 0 % c. What discount rate would produce a net present value of zero? Answer 0 %

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Answer #1

a)-2014.43

b)13.00%

c)The discount rate which produces net present value zero is nothing but irr and here it is 13%

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