All techniques Rieger International is evaluating the feasibility of investing $115,000 in a piece of equipment that has a 5-year life. The firm has estimated the cashinflows associated with the proposal as shown in the following table: The firm has a cost of capital of 9%.a. Calculate the payback period for the proposed investment.b. Calculate the net present value (NPV) for the proposed investment.c. Calculate the probability index for the proposed investment.d. Calculate the internal rate of return (IRR) for the proposed investment.a. The payback period of the proposed investment is years. (Round to two decimal places.)b. The NPV of the proposed investment is $ (Round to the nearest cent.)c. The probability index of the proposed investment is(Round to two decimal places)d. The IRR of the proposed investmentData table(Click on the icon here in order to copy the contents of the data table belowa spreadsheet.)Year (0)Cash inflows (CF₁)$30,0002$20,000$40,000O$40,000$40,0003455:52Next

Payback Period: It is the period in which the investment or project returns back its initial cost…

a. The payback period of the proposed investment is years. (Round to two decimal places.) b. The NPV of the proposed investment is $ (Round to the nearest cent.) c. The probability index of the proposed investment is (Round to two decimal places)

a. The payback period of the proposed investment is years. (Round to two decimal places.) b. The NPV of the proposed investment is $ (Round to the nearest cent.) c. The probability index of the proposed investment is (Round to two decimal places)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...

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Question

All techniques Rieger International is evaluating the feasibility of investing $115,000 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 cost of capital of 9%.
a. Calculate the payback period for the proposed investment.
b. Calculate the net present value (NPV) for the proposed investment.
c. Calculate the probability index for the proposed investment.
d. Calculate the internal rate of return (IRR) for the proposed investment.
a. The payback period of the proposed investment is years. (Round to two decimal places.)
b. The NPV of the proposed investment is $ (Round to the nearest cent.)
c. The probability index of the proposed investment is
(Round to two decimal places)
d. The IRR of the proposed investment
Data table
(Click on the icon here in order to copy the contents of the data table below
a spreadsheet.)
Year (0)
Cash inflows (CF₁)
$30,000
2
$20,000
$40,000
O
$40,000
$40,000
3
4
5
5:52
Next

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