Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for...
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Consider an investment that costs $100,000 and has a cashinflow of $25,000 every year for 5 years. The required return is 9%and required payback is 4 years.• What is the payback period?• What is the NPV?• What is the IRR?• Should we accept the project?What decision rule should be the primary decisionmethod?When is the IRR rule unreliable?••
Consider an investment that costs $100,000 and has a cashinflow of $25,000 every year for 5 years. The required return is 9%and required payback is 4 years.
• What is the payback period?
• What is the NPV?
• What is the IRR?
• Should we accept the project?
What decision rule should be the primary decisionmethod?
When is the IRR rule unreliable?
•
•
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3.7 Ratings (395 Votes)
1Payback period Year Cash inflows Cumulative cash flows 0 100000 100000 1 25000 75000 2 25000 50000 3 25000 25000 4 25000 0 5 25000 25000 As per the above table Payback period is 4 years
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