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2) (Ignore income taxes in this problem) Chow Company has the following data available for an investment Initial investment $142,500 Annual savings $30,000 Salvage value
2) | (Ignore income taxes in this problem) Chow Company has the following data available for an investment | ||||
Initial investment | $142,500 | ||||
Annual savings | $30,000 | ||||
Salvage value | zero | ||||
Life of investment | 8 years | ||||
Required rate of return | 10% | ||||
Questions below | |||||
a) | What is the payback period for the investment? | ||||
b) | Compute the net present value and show all calculations. | ||||
c) | Is this a good investment for the firm? | ||||
d) | The internal rate of return is closest to: |
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