Required information A potential investment has a cost of $440,000 and a useful life of 7 years. Annual cash sales from the investment are expected to be $183,068 and annual cash operating expenses are expected to be $72,118. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 15%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e..055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment $ FV of the investment NPV of the investment IRR of the investment $ SA %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Required information
A potential investment has a cost of $440,000 and a useful life of 7 years. Annual cash
sales from the investment are expected to be $183,068 and annual cash operating
expenses are expected to be $72,118. The expected salvage value at the end of the
investment's life is $35,000. The company has a before-tax discount rate of 15%.
Required:
Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place
(i.e. .055 = 5.5%). Enter negative amounts with a minus sign.)
Annual PMT of the investment
FV of the investment
NPV of the investment
IRR of the investment
$
LA
GA
GA
%
Transcribed Image Text:Required information A potential investment has a cost of $440,000 and a useful life of 7 years. Annual cash sales from the investment are expected to be $183,068 and annual cash operating expenses are expected to be $72,118. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 15%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment $ LA GA GA %
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