Question

Rieger International is evaluating the feasibility of investing

$104 comma 000104,000

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:

LOADING...

. The firm has a

1111%

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

1 |
40000 |

2 |
35000 |

3 |
25000 |

4 |
35000 |

5 |
25000 |

Answer #1

Payback, NPV, and IRR Rieger International is evaluating the
feasibility of investing
$95 comma 00095,000
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:
LOADING...
. The firm has a
99 %
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...

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Year
(t)
Cash inflows (CF)
1
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2
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