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Refer to Giant Tiger in S12-13. What is the approximate internal rate of return (IRR) of the

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Refer to Giant Tiger in S12-13. What is the approximate internal rate of return (IRR) of the kiosk investment?
In S12-13 The local Giant Tiger department store is considering investing in self-checkout kiosks for its customers. The self-check-out kiosks will cost $45,000 and have no residual value. Management expects the equipment to result in net cash savings over three years as customers grow accustomed to using the new technology: $14,000 the first year; $19,000 the second year; $24,000 the third year. Assuming a 10% discount rate, what is the NPV of the kiosk investment? Is this a favourable investment? Why or why not?
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment...
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The IRR is the interest rate at which the NPV 0 Well start the tr...View the full answer


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NPV stands for \"Net Present Value,\" which is a financial concept used to determine the value of an investment or project. It measures the difference between the present value of cash inflows and the present value of cash outflows over a given period of time, using a specific discount rate. To calculate the NPV of an investment, you need to first estimate the cash inflows and outflows associated with the investment, and then discount them back to their present values using a discount rate. The discount rate represents the cost of capital or the expected rate of return required by investors. The formula for calculating NPV is: NPV = sum of (cash inflows / (1 + discount rate)^t) - sum of (cash outflows / (1 + discount rate)^t) Where: Cash inflows: the expected cash received from the investment Cash outflows: the expected cash paid out for the investment Discount rate: the required rate of return or the cost of capital t: the time period in which the cash flow occurs If the NPV is positive, it means that the investment is expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a good investment. If the NPV is negative, it means that the investment is not expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a bad investment.

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