Question

Vaughn Company has the following information about a potential capital investment:
Initial investment ........ $ 400,000
Annual cash inflow ........ $ 70,000
Expected life ........ 10 years
Cost of capital ........ 11%

1. Calculate and evaluate the net present value of this project.
2. Without any calculations, explain whether the internal rate of return on this project is more or less than 11 percent.



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  • CreatedFebruary 27, 2015
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