In an investment project, the initial cost of investment is $400,000. The annual revenues are expected to be $ 195,000 over the 6-years life of the machine, and the annual expenses will be $100,000. The market value of the machine after 6 years is $50,000. (Note that, the project is already accepted with a MARR = 10%) a) What is the simple payback period of the investment? b) What is the internal rate of return of the investment?

In an investment project, the initial cost of investment is $400,000. The annual revenues are expected to be $ 195,000 over the 6-years life of the machine, and the annual expenses will be $100,000. The market value of the machine after 6 years is $50,000. (Note that, the project is already accepted with a MARR = 10%) a) What is the simple payback period of the investment? b) What is the internal rate of return of the investment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 27P

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