Question: Net Present Value Method and Internal Rate of Return Method for a service company Keystone Healthcare Corp. is proposing to spend $154,715 on an eight-year
Net Present Value Method and Internal Rate of Return Method for a service company Keystone Healthcare Corp. is proposing to spend $154,715 on an eight-year project that has estimated net cash flows of $29,000 for each of the eight years. Present Value of an Annuity of $1 at Compound Interest. a. Compute the net present value, using a rate of return of 12%. Use the table of present value of an annuity of $1 presented above. If required, round to the nearest dollar. Use the minus sign to indicate a negative net present value. b. Based on the analysis prepared in part (a), is the rate of return (1) more than 12%,(2) 12%, or (3) less than 12% ? C. Determine the internal rate of return by computing a present value factor for an annuity of $1 and using the table of the present value of an annuity of $1 presented above. %
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