The company is exploring the purchase of a new piece of equipment that will cost $1,500,000, at an expected discount rate of 8%. The equipment is expected to return net cash inflows of $250,000 over the next 10 years.

Based on the above information calculate the following items for this proposed equipment purchase:

2. Net Present Value
4. Internal Rate of Return
6. Payback Period

Would you recommend the company invest in this equipment? Why or why not?

Please explain the NPV, IRR, and payback calculations. Also, please explain how would I use an Excel sheet to calculate NPV, IRR, and Payback period.

Answer rating: 100% (QA)

Net Present Value NPV 1 List out the expected annual cash flows over 10 years Year 0 1500000 Initial ... View the full answer