Question
question 10 wet water company drills residential and commercial wells the company is in the process of analyzing the purchase of a new drill information
question 10
wet water company drills residential and commercial wells the company is in the process of analyzing the purchase of a new drill information on the proposal is provided below:
initial investment:
asset $80000
working capital 16000
operations per year for four years :
cash receipts $80000
cash expenditures 444000
disinvestment:salvage value of drill
end of year four ) $8000
discount rate 10 percent
note: other than the initial investment cash flows are end of period the working capital is returned at the end of the investment period
1- what is the net present value for the wet water company new drill ?
1-$23579.26
2-$34507.48
3-$12651.05
4-$96000
5-$1722.83
2-in what range is the internal rate of return for the wet water company new drill ?
1-8% to 12%
2-20% to 24%
3-12% to 16%
4-16% to 20%
5-greater than 24%
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