Question
You purchased a small company for $50,000 (in year zero). Unfortunately, things did not go well and your company lost $2,500 each year for the
You purchased a small company for $50,000 (in year zero). Unfortunately, things did not go well and your company lost $2,500 each year for the first three years. To alleviate the situation, during the third year, you decided to invest an additional $12,000 in the company. This smart decision resulted in a profit of $11,000 each year from the fourth year through the 16th year. At the end of 16 years the company can be sold for $40,000. Calculate the internal rate of return (IRR) as well as the NPV if MARR = 12%. Neglect depreciation or taxes in this problem
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