An Asset required an initial investment of $14,705 and is expected to generate $5,000 in net...
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An Asset required an initial investment of $14,705 and is expected to generate $5,000 in net cash flows in each year of its 3-yr. life. Step 1: Compute the present value factor for the investment Present value factor = Initial investment / Annual net cash flows = $14,705 / $5,000 = ? Using the Table below, identify what is the closest discount rate to ? that you calculated. This discount rate is the IRR--Internal rate of return. The internal rate of return for this Asset would be (Ignore the number that is in bold) Present Value of an Annuity of 1 for Three Periods Discount Rate Periods 1% 5% 10% 12% 15% 3.... 2.9410 2.7232 2.4869 2.4018 2.2832 A 1% B 5% 10% D 15% An Asset required an initial investment of $14,705 and is expected to generate $5,000 in net cash flows in each year of its 3-yr. life. Step 1: Compute the present value factor for the investment Present value factor = Initial investment / Annual net cash flows = $14,705 / $5,000 = ? Using the Table below, identify what is the closest discount rate to ? that you calculated. This discount rate is the IRR--Internal rate of return. The internal rate of return for this Asset would be (Ignore the number that is in bold) Present Value of an Annuity of 1 for Three Periods Discount Rate Periods 1% 5% 10% 12% 15% 3.... 2.9410 2.7232 2.4869 2.4018 2.2832 A 1% B 5% 10% D 15%
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