NPV / IRR homework question
1. Jackson Company is considering the investment in a computer system. The company estimates that it will require an initial outlay of $1,200,000. Other cash flows will be as follows:
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($600,000) |
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Year 2 |
150,000 |
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Year 3 |
620,000 |
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Year 4 |
725,000 |
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Year 5 |
800,000 |
Required:
Assuming the company limits its analysis to five years, should the company consider this investment? Calculate the net present value of this project with a required rate of return of seven percent. Also, does your answer change if the required rate of return is 12 percent?
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NPV / IRR homework question was first posted on September 24, 2020 at 6:24 am.
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