Answer to Question #222390 in Finance for De prince

Question #222390

As investment with a 3year life and a cost of #120000 generates revenue of #25000 in year 1 #45000 in year 2 and #65000 in year 3. If the discount rate is 8%

(i) what is the NPV of the investment.

(ii) state whether the investment should be accepted or not and why.

(iii) using 12% as your second discount rate, to solve the remaining part of the question under IRR.


1
Expert's answer
2021-08-05T13:58:52-0400

Solution







NPV1= -6672.5


Ii.) Negative NPV, investment should not be accepted


12% discount

PV= 120000








t=3

t=1

t= number of years


Co = initial investments


t= Number or periods


r= Discount rate


%


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