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Find internal rate of return using the interpolation method

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Reference no: EM132709568

Capital budgeting methods:

River Flow Company runs hardware stores. River Flow's management estimates that if it invests Rs 250,000 in a new computer system, it can save Rs 67,000 in annual cash operating costs. The system has an expected useful life of eight years and no terminal disposal value. The required rate of return is 8%. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.

Required:

Question a. Net present value

Question b. Payback period

Question c. Internal rate of return (using the interpolation method)

Reference no: EM132709568

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