Take Home Question (20 points)

Geary Company is considering an investment costing $110,000. The investment would return $40,000 pe year in each of five years. The investment will require working capital of $30,000. Geary requires a minimum rate of return of 10%. You may (should) use an excel spreadsheet to complete this problem.

A. What is the Net Present Value for the investment?

B. What is the Internal Rate of Return for the investment?

C. D. If the investment had a salvage value of $10,000, what would the Net Present Value be? If the investment had a salvage value of $10,000, what would the Internal Rate of Return be?