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What is the internal rate of return of the investment

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Reference no: EM132487763

Your company is considering purchasing a new building as part of an expansion plan. The building cost is $1.5 million. Instead of paying cash for the building out of the business, you plan to borrow $500,000 from your bank via a commercial loan, at a rate of 4.5%. The balance of the building cost will be pulled from your personal investment account, which has averaged only a 1% return the past eight years. The company will pay your personal loan back at a 3% interest rate. The cash flows from the building acquisition are expected to be steady over the next 10 years at $225,000 per year. Answer the following questions.

Question A) What is the weighted average cost of capital (WACC) for the investment?

Question B) What is the present value of the cash flows?

Question C) What is the Net Present Value (NPV) of the investment?

Question D) What is the Internal Rate of Return (IRR) of the investment?

Question E) What is the payback period?

Reference no: EM132487763

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