Problem 13-4

A firm is evaluating the acceptability of an investment that costs $90,000 and is expected to generate annual cash flows equal to $20,000 for the next six years. If the firm's required rate of return is 10 percent, what is the NPV of the project? Should the project be purchased?

Problem 13-5

What is the IRR of a project that costs $45,000 if it is expected to generate $15,047 per year for five years?