Calculate the payback period for the proposed investment

Reference no: EM13120367

Rieger International is attempting to evaluate the feasibility of investing $ 95,000 in a piece of equipment that has a 5- year life. The firm has estimated the cash inflows associated with the proposal as shown in the table at the right. The firm has a 12% cost of capital.

Year ( t) Cash inflows ( CFt)
1 $ 20,000
2 25,000
3 30,000
4 35,000
5 40,000

a. Calculate the payback period for the proposed investment.
b. Calculate the net present value ( NPV) for the proposed investment.
c. Calculate the internal rate of return ( IRR), rounded to the nearest whole percent, for the proposed investment.
d. Evaluate the acceptability of the proposed investment using NPV and IRR. What recommendation would you make relative to implementation of the project? Why?

Reference no: EM13120367

Questions Cloud

Writing mathematical expression for total profit : There is a fixed cost of $50,000 to start a production process. Once the process has begun, the variable cost per unit is $25. The revenue per unit is projected to be $45. Write a mathematical expression for total profit.

Important information about probability and statisics : Important information about Probability and Statisics. Find the probability that a randomly selected adult has an IQ between 90 and 110

Calculate the payback period for the proposed investment : Rieger International is attempting to evaluate the feasibility of investing $ 95,000 in a piece of equipment that has a 5- year life. The firm has estimated the cash inflows associated with the proposal as shown in the table at the right. The firm..

Use the central limit theorism to solve question : what is the probability that the sample mean will be at least 1000? Do you need to use the central limit theorism to answer this question? explain.

Find the probability distribution of a random sample : How do you find the probability distribution of a random sample from a known population?

Find binomial probability distribution : Binomial Probability Distribution : explained. Thirty percent of women are basketball fans . Four women are randomly selected . Find the probability distribution of the random variable X,

Distinction between equation and expression : Can I get some help for me to understand what is the difference between an equation and an expression? Can you solve for a variable in an expression? Could you explain.

Write an essay on psychoanalytic personality : Write an essay on Psychoanalytic Personality. The essay must have 5-6 pages total and properly cited.

User Account

All Pages