Question
Payback Period, IRR, and Minimum Cash Flows The management of Mesquite Limited is currently evaluating the following investment proposal: Time 0 Year 1 Year 2
Payback Period, IRR, and Minimum Cash Flows The management of Mesquite Limited is currently evaluating the following investment proposal:
| Time 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
|---|---|---|---|---|---|
| Initial investment | $270,000 | -- | -- | -- | -- |
| Net operating | |||||
| cash inflows | -- | $100,000 | $100,000 | $100,000 | $100,000 |
(a) Determine the proposal's payback period. Answer
years (b) Determine the proposal's internal rate of return. (Refer to Appendix 24B if you use the table approach.) Answer
% (c) Given the amount of the initial investment, determine the minimum annual net cash inflows required to obtain an internal rate of return of 8 percent. Round the answer to the nearest dollar. $ Answer
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Fundamentals Of Auditing
Authors: Basu
1st Edition
8131728854, 978-8131728857
