Use both the NET present value (NPV) and the Internal Rate of return (IRR) to assess...

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Finance

Use both the NET present value (NPV) and the Internal Rate ofreturn (IRR) to assess and draw conclusions when advising a companywhich is wondering whether to K18 000 on an item of equipment inorder to obtain cash profits as shown below
                     Year                                        K
                       1                                             6000
                       2                                            8000
3           5000
4                                            1000
Note: The company requires a return of 10% per annum.

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Intial Investment C0 k 18000 Cashflows in Year 1 C1 K 6000 Year 2 C2 K 8000 Year 3 C3 K 5000 Year 4 C4 K 1000 Required rate of return r 10 NPV Present value of future cashflow See Answer

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Use both the NET present value (NPV) and the Internal Rate ofreturn (IRR) to assess and draw conclusions when advising a companywhich is wondering whether to K18 000 on an item of equipment inorder to obtain cash profits as shown below Year K 1 6000 2 80003 50004 1000Note: The company requires a return of 10% per annum.