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Based on the following information, calculate and show work for net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity:
Based on the following information, calculate and show work for net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity:
- EEC expects to save $500,000 per year for the next 10 years by purchasing the supplier.
- EEC's cost of capital is 14%.
- EEC believes it can purchase the supplier for $2 million.
- Would your answer be the same if EEC did not save $500,000 per year as anticipated? What would be the least amount of savings that would make this investment attractive to EEC?
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Introduction To Financial Accounting
Authors: Charles T Horngren, Gary L Sundem
10th Edition
136122973, 978-0136122975
