Solution-Calculate the payback period

Calculate the payback period

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Reference no: EM133003167

1. (Part 1) Suppose you have an investment opportunity that requires a $40,000 initial investment, but will repay you $20,000 at the end of each of the next three years (first payment in one year).

(a) Calculate the payback period

(b) Calculate the IRR

(Part 2) Suppose you are given a different investment opportunity, one that requires the same initial investment of $40,000, but is estimated to pay out $10,000 the first year and $26,000 in each of the following two years. Compare this investment to the investment in Part 1. Which is more attractive? If it depends on interest rates, explain how.

Reference no: EM133003167

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Calculate the payback period

Reference no: EM133003167

Reference no: EM133003167

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