NPV and IRR: Unequal Annual Net Cash Inflows (LO2)

Salt River Company is evaluating a capital expenditure proposal that has the following predicted cash flows:

fittiallinVeEStmmen tee as crscucscs Gert ne acne ancy eran eeneeeene $(43,270)

Operation NACEURAll cp) ettsed Cis ene ene ie OR OREN ey Seo OO Oe 20,000 Weve IE) Dibiena otb c 6 cor) Ohana: Rare aera ete hE 6 30,000 NAST hibite cha Phanche Mra anes alt Rar nA earn Cn cer Phe os 10,000 SalVAG Ctepen stil fe ces ete secs (annV ouseegsl’s os aya nsiel sep yala tek eane 0)

Required

a. Using a discount rate of 14 percent, determine the net present value of the investment proposal.

b. Determine the proposal’s internal rate of return. (Refer to Appendix 12B if you use the table approach. )

 LO.1