Answered: what is the internal rate of return of…

Business

Finance

what is the internal rate of return of $10,000 investment that yields an annual benefit of $2,400 for 5 years?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter9: Capital Budgeting Techniques

Section: Chapter Questions

Problem 6PROB

See similar textbooks

Related questions

Q: Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for 5 years.…

A: IRR is the rate at which NPV of the project is zero. Using excel IRR function

Q: A one-year investment yields a return of 15%. The cash returned from the investment, including…

A: We have the following information: A one-year investment yields a return of 15% The cash returned…

Q: Your firm has taken on cost saving measures that will provide a benefit of $11,000 in the first…

A: First year benefits (C) = $11,000 Annual growth rate (g) = - 0.03 (-3%) Interest rate (r) = 0.09…

Q: What is the present value of your-end-of-year investment of $1000 per year, with the first cash flow…

Q: In one year, a project will be worth $10,000. What is that project worth today assuming a discount…

A: We need to use the concept of time value of money to solve the question. According to the concept of…

Q: Find the time required for an investment of 5000 dollars to grow to 6300 dollars at an interest rate…

A: 1. Future Value = Present Value * (1 + Interest per Compounding Period)^# of Periods Investment =…

Q: A man's investment of P100,000 is expected to yield a regular income of P25,000 per year for 10…

A: Solution:- Benefit cost ratio means the ratio of present value of benefits from a project to present…

Q: An investment of $20,000 will create a perpetual after-tax cash flow of $2,000. The required rate of…

A: We have the following information: Investment: $20,000 Perpetual After-tax cash flow of: $2,000…

Q: If an investment project costs a firm £200 and yields a stream of profits of £100 per year for the…

A: Internal rate of return(IRR) is one of the techniques of capital budgeting that take into…

Q: hat will pay $1,000/year for

A: The given problem can be solved using RATE function in excel. RATE function computes interest rate…

Q: An investment of $81,000 yields a net annual income of $17,000 for 6 years. What is the internal…

A: Capital budgeting is the process of making capital investment decisions by a corporation. Capital…

Q: What is the payback if an investment’s cost is $45,000 and the after-taxbenefit is $2,000 per year?

A: Investment cost =$45000 After tax benefits = $2000 Payback period formula: Payback period =…

Q: An investment project costs $50,000 and has annual cash flows of $3,500 for 20 years. What is the…

A: Discounted Payback period refers to one of the modern techniques which measure the time that the…

Q: How much was initially invested if the value of the investment is at P200,000 after 3 and a half…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: The initial cost of an investment is $65,000 and thecost of capital is 10%. The return is $16,000…

A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…

Q: A capital budgeting project has a net investment of $250,000 and is expected to generate net cash…

A: Formulas:

Q: How much should be put in an investment with a 10% effective annual rate today to have P10,000 in…

A: The future value of a cash flow is the future worth of a cash flow at a certain arte of interest for…

Q: Calculate the present value of $89,000 to be received in 15 years, assuming an opportunity cost of…

A: Present value is defined as the present discounted value in which an expected income stream value…

Q: Illustration: An investment opportunity costs $10,000 and returns $5,000, $4,000, and $3,000,…

Q: An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next…

A: Internal rate of Return: IRR is a discounting cash flow technique gives rate of return earned by…

Q: What is the present value of $2,000 received today, $2,500 received at the end of each of the next…

A: Present value of cashflow for any year = Cashflow for that year/(1+ discount rate)^time Cashflow for…

Q: What is the profitability index of a project that costs $87 and returns $42 annually for 8 years if…

A: Introduction Profitability Index As the word states, PI(Profitability index measures the ratio…

Q: An investment will provide after-tax revenue of $22,336 per year for 7 years. What is the present…

A: After tax revenue (P) of $22,336 for a period (n) of 7 years will be received. Present value annuity…

Q: Use the graph below to answer the following questions. What is the approximate final value of…

A: Future value = Present value * ( 1 + Interest rate )time

Q: What is the NPV of a project with an initial investment of $100, a cash flow in one year of $105,…

A: Net present value is the technique used in capital budgeting to evaluate the acceptability of the…

Q: Determine when, to the nearest year, $3,000 invested at 5% per year, compounded daily, will be worth…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: The value of an investment comes from its cash flows. Let’s say you are intent on receiving $45,000…

A: A concept through which it is studied that the current worth of money is higher than its future…

Q: How much was initially invested if the value of the investment is at ₱200,000 after 3 and a half…

A: Present Value: It is the present worth of the investment amount, discounted at an interest rate for…

Q: An investment of $8,000 is made at time 0 with returns of $3,500 at the end of each of years 1–4,…

A: present worth formula: pw=-initial investment+present value of future cashflow

Q: How would you set up the function in Excel to get the IRR of an investment of $22,500 over 6 years,…

A: Internal Rate of Return: The Internal Rate of Return (IRR) is the required rate of return at which…

Q: An investment of P100,000 is expected to yield a regular annual net income of P25000 for 10 years.…

A: A benefit-cost ratio (BCR) is a ratio used in a cost-benefit analysis to summarize the overall…

Q: An investment of $23,500 in new equipment will generate income of $6,500 per year for 10 years. What…

A: PV of cash outflow=$23,500 Income per year=$6,500 Duration(n)=10 years As per the equation of IRR,…

Q: An rrsp is now worth $229,000 after contributions of $3000 at the beginning of every six months for…

A: Worth of rrsp"Future Value" is $229,000 Paymant type is begining of the period. Semi annual…

Q: An investment project provides cash inflows of $850 per year for five ears. What is the project…

A: Annual cash inflow = $850 Initial cost = $5,6004

Q: An investment costs $465 and is expected to produce cash flows of $100 at the endof each of the next…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: An initial investment of $2,324,000 is expected to generate $600,000 per year for 6 years. Calculate…

A: Discounted Payback period = Year before the discounted payback period occurs + (cumulative cashflow…

Q: What is the future worth six years from now of a present cost of $375,000 to Corning, Inc. at an…

A: Time value of money- It is based on the concept that money earned today is worth more than similar…

Q: future value of an investment made 5 years ago is P150,000. If the investment offered an annual…

A: Effective rate goes on increasing if the compounding goes on increasing. And effective rate is less…

Q: What is the present worth of the project, whichrequires $130,000 investment now and receives$40,000…

A: given, rate =14% Initial investment = $130,000 annual cashflow=$40,000 year=6

Q: Machine X will produce cost savings of $6,000 per year for four years; machine Y will produce cost…

A: Calculate the present value for both machines as follows:

Q: What is the IRR of an investment of 2 million with a yearly savings of 500,000 for 10 years and a…

A: Internal Rate of Return (IRR) is that discounting rate at which Net Present Value of the project is…

Q: A similar application for investment yields can be made in cases where monthly cash annuities will…

A: PRESENT VALUE 51593 NPER (n) 240 PMT 400 FUTURE VALUE 0

Q: Determine the average rate of return for a project that is estimated to yield total income of…

A: Average rate of return = Average Annual income / Initial investment where, Average Annual income =…

Q: What would be the rate of return (IRR) on a project that had an initial cost of $100,000 today and…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Question

100%

what is the internal rate of return of $10,000 investment that yields an annual benefit of $2,400 for 5 years?

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one year and the rate is 10%?
Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?
Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?