Acme Industries is considering a project that will cost $200,000 and generate returns of $45,000 at the end of year 1, $85,000 at the end of year 2, $65,000 at the end of year 3 and $30,000 at the end of year 4.

Calculate the NPV of the project using a cost of capital of j₁=7.5%.

 

2.A project costs $50,000 and is expected to return profits of $10,000 per year. 

Calculate the payback period to 2 decimal places.

 

3.  Nora is thinking about buying a small business for $100,000. She expects to earn profits of $10,000 per year for 5 years and then sell the business for $115,000 (also at the end of the fifth year).

Calculate the IRR for the business. Round your answer to the nearest percent.

Answer rating: 100% (QA)

1 Calculate the NPV of the project using a cost of capital discount rate of 75 To calculate the Net ... View the full answer