Rieger International is evaluating the feasibility ofinvesting
?$90,000
in a piece of equipment that has a
55?-year
life. The firm has estimated the cash inflows associated withthe proposal as shown in the following? table:
| Year ?(t?) | Cash inflows? (CF) | |
1 | ?$20 comma 00020,000 |
2 | ?$25 comma 00025,000 |
3 | ?$35 comma 00035,000 |
4 | ?$30 comma 00030,000 |
5 | ?$30 comma 00030,000 |
.
The firm has a
88?%
cost of capital.
a.??Calculate the payback period for the proposedinvestment.
b.??Calculate the net present value? (NPV) for the proposedinvestment.
c.??Calculate the internal rate of return
?(IRR)?,
rounded to the nearest whole? percent, for the proposedinvestment.
d.??Evaluate the acceptability of the proposed investment usingNPV and IRR. What recommendation would you make relative toimplementation of the? project?
a. The payback period of the proposed investment is _____
years.???(Round to two decimal? places.)
b.??The NPV of the proposed investment is $_____
?(Round to the nearest? cent.)
c.??The IRR of the proposed investment is _____ ?%.
?(Round to two decimal? places.)
d.??Should Rieger International accept or reject the proposed?investment????(Select the best answer? below.)
A.
Reject
B.
Accept
