Ribu Riban Company is attempting to evaluate the feasibility on investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal...


Ribu Riban Company is attempting to evaluate the feasibility on investing $95,000 in a piece
of equipment that has a 5-year life. The firm has estimated the cash inflows associated with
the proposal as shown in the following table. The firm has a 12% cost of capital.





























Year (t)Cash inflows(CFt) – $
120,000
225,000
330,000
435,000
540,000


a. Calculate the net present value (NPV) for the proposed investment.
b. Calculate the internal rate of return (IRR) for the proposed investment.
c. Evaluate the acceptability of the proposed investment using NPV and IRR. What
recommendation would you make relative to implementation of the project? Why?
d. What if NPV and IRR result contradicts one another. Theoretically which result should
you choose? How about practically? Is there any difference? Discuss.



Jun 06, 2022
SOLUTION.PDF

Get Answer To This Question

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here