Question
City of BudgetBurg is considering the purchase of new equipment that will cost $0.795 million if purchased today and will generate the following cash inflows
City of BudgetBurg is considering the purchase of new equipment that will cost $0.795 million if purchased today and will generate the following cash inflows and outflows:
Year. Receipts. Cash Expenditures 1. $750,000.00. $500,000.00 2. $775,000.00. $525,000.00 3. $775,000.00. $525,000.00 4. $800,000.00. $550,000.00 5. $875,000.00. $625,000.00
The cost of capital is 8.50% annually. Reinvestment rate is 3.00%.
Questions: Calculate NPV, IRR, MIRR, BCR, and Payback of the project. Should BudgetBurg pursue this investment?
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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
9th Edition
0324656122, 978-0324656121
