Current Attempt in Progress In the process of researching new equipment, Aldo settled on two seemingly viable alternatives: 1. 2. A one-time investment today of $40,000, which should generate net after-tax cash inflows of $20,000 per year for the next 3 years. A one-time investment today of $50,000, which should generate net after-tax cash flows of $30,000 per year for the next 3 years. 4 Both amounts already include the depreciation tax shield. Aldo's minimum required return is 8%. (a1) Calculate the NPV and IRR for both of these investments. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final NPV answers to O decimal places eg. 58,971. Round IRR to 2 decimal places, e.g. 15.25%. Enter negative amounts using either a negative sign preceding the number, e.g.-58,971 or parentheses, eg. (58,971)) Click here to view the factor table Option 1 NPV $ IRR % Option 2 $ (a2) Which investment appears to be the better option? %

Current Attempt in Progress In the process of researching new equipment, Aldo settled on two seemingly viable alternatives: 1. 2. A one-time investment today of $40,000, which should generate net after-tax cash inflows of $20,000 per year for the next 3 years. A one-time investment today of $50,000, which should generate net after-tax cash flows of $30,000 per year for the next 3 years. 4 Both amounts already include the depreciation tax shield. Aldo's minimum required return is 8%. (a1) Calculate the NPV and IRR for both of these investments. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final NPV answers to O decimal places eg. 58,971. Round IRR to 2 decimal places, e.g. 15.25%. Enter negative amounts using either a negative sign preceding the number, e.g.-58,971 or parentheses, eg. (58,971)) Click here to view the factor table Option 1 NPV $ IRR % Option 2 $ (a2) Which investment appears to be the better option? %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 26P

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