Calculate the payback period and irr

Assignment Help Financial Management

Reference no: EM131907224

1. Suppose you have an investment opportunity that requires a $40,000 initial investment, but will repay you $20,000 over each of the next three years. Calculate the payback period and IRR. Assuming an interest rate of 6%, calculate the NPV.

2. Suppose you are given a different and mutually exclusive 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 Problem 1. Which is more attractive? If it depends on interest rates, explain how.

Reference no: EM131907224

Questions Cloud

What is a linear diophantine equation of two variables : What is a linear Diophantine equation of two variables? How many solutions can such an equation have? How can the solutions) be found?

Define the greatest common divisor of two integers : Define the greatest common divisor of two integers. Which algorithm can effectively find the greatest common divisor?

What rate would you expect to receive : Suppose you read in the Wall Street Journal that the price of GE is expected to increase in the future. Should you invest in GE ?

Show how ip sec reacts to a brute-force attack : Show how IP Sec reacts to a brute-force attack. That is, can an intruder do an exhaustive computer search to find the encryption key for IP Sec?

Calculate the payback period and irr : Suppose you have an investment opportunity that requires a $40,000 initial investment, but will repay you $20,000 over each of the next three years.

How ike reacts to the replay attack in the aggressive mode : Show how IKE reacts to the replay attack in the aggressive mode. That is, show how IKE responds to an attacker that tries to replay one or more messages.

What is the capital gains yield : Suppose a stock had an initial price of $77 per share, paid a dividend of $1.05 per share during the year, and had an ending share price of $83.

Number of male and female students : The table below shows the number of male and female students enrolled in nursing at the University of Oklahoma Health Services Center for a recent semester

Would a long hedge be more appropriate than a short hedge : Would a long hedge be more appropriate than a short hedge for AFB? Why or why not?

User Account

All Pages