Question
NPV and IRR: Unequal Annual Net Cash Inflows Rocky Road Company is evaluating a capital expenditure proposal that has the following predicted cash flows: Initial
NPV and IRR: Unequal Annual Net Cash Inflows Rocky Road Company is evaluating a capital expenditure proposal that has the following predicted cash flows:
| Initial investment | $(85,000) |
| Operation | |
| Year 1 | 30,500 |
| Year 2 | 60,000 |
| Year 3 | 31,000 |
| Salvage | 0 |
(a) Using a discount rate of 12%, determine the net present value of the investment proposal. $Answer
(b) Determine the proposal's internal rate of return. (Refer to Appendix 24B if you use the table approach.) Hint: You will need to use a trial-and-error approach. (Round to the nearest whole percentage.) Answer
%
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Frank Woods Business Accounting Volume 1
Authors: Alan Sangster, Frank Wood
13th Edition
9781292084664
