Triangle Corp is planning to buy a new computer for $750,000 with a useful life of six
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Question:
Triangle Corp is planning to buy a new computer for $750,000 with a useful life of six years. At the end of six years, the system will have no value. Over the six years the system will save them $250,000 each year for the first three years and $100,000 each year for the last three years.
a. What is the NPV of the project if Triangle Corp requires a return of 15%?
b. What is the IRR for this project?
c. At what required rate of return is the project’s NPV = 0?
d. How are NPV and IRR related?
e. At a required rate of return of 15%, is the project acceptable?
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