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Suppose you are offered $7,500 today but must make the following payments: Year Cash Flows ($) 0 $ 7,500 1 4,200 2 2,900 3 2,000

Suppose you are offered $7,500 today but must make the following payments:

Year Cash Flows ($)
0 $ 7,500
1 4,200
2 2,900
3 2,000
4 1,300

a. What is the IRR of this offer? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. If the appropriate discount rate is 12 percent, should you accept this offer?
  • Reject

  • Accept

c. If the appropriate discount rate is 24 percent, should you accept this offer?
  • Reject

  • Accept

d-1.

What is the NPV of the offer if the appropriate discount rate is 12 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

d-2. What is the NPV of the offer if the appropriate discount rate is 24 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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