Finance Problems

Each cash flow will be discounted by multiplying it by the result of the formula 1 / (1 + Interest Rate)Time

The Internal Rate of Return (IRR) is the discount rate that makes the NPV Equal to 0. Thus 15% is the highest discount rate that would make the project acceptable. Since the project has a positive Net Present Value at the assigned discount rate, it should be accepted.

2500/50 = 50 months or 4 years 2 months

Since the payback period is less than five years, the project will be accepted.

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Category: Economics - F