Use the financial formulas, Net Present Value (NPV), Internal Rate of Return (IRR), and Payback, how can
Question:
Use the financial formulas, Net Present Value (NPV), Internal Rate of Return (IRR), and Payback, how can I calculate from the information in this document?
Net present value=Present Value of cash inflows-Present value of cash outflows; Cash flows are discounted using discounting rate applicable for different years.
Internal rate of return-It is discounting rate at which PV of cash inflows =PV of cash outflows. Various discounting rates to be tried to reach at which rate is IRR.
Payback period is the amount of time to recover cost of investment; payback period=Initial investment/net cash flow.
This is the information given: Payback in details, within 8 years or less. This is a very important starting point to know how long it will take to pay-off the education loan. NPv in detail (the result should be positive (use the government bond rate for the duration +3%) IRR in detail (based on the above data) Opportunity Cost is 125k Steady growth of 5% Interest rate 7% Cost of living is 30k for two years.
Do I need to provide more information.