An investor buys a building for $500,000 cash and leases it for payments of: $85,000 $85,000 $90,000 $90,000 Year 1 Year 2 Year 3 Year 4 At the end of Year 4, the building will be sold for $515,000 in net sales proceeds. Similar investments yield a 13% return. (Questions 19-20) 19. What is the net present value (NPV)? a) $65,812.67 b) $72,490.37 c) $75,221.05 d) $85,221.05 20. What is the internal rate of return (IRR)? a) 12.00% b) 17.99% c) 18.45%
An investor buys a building for $500,000 cash and leases it for payments of: $85,000 $85,000 $90,000 $90,000 Year 1 Year 2 Year 3 Year 4 At the end of Year 4, the building will be sold for $515,000 in net sales proceeds. Similar investments yield a 13% return. (Questions 19-20) 19. What is the net present value (NPV)? a) $65,812.67 b) $72,490.37 c) $75,221.05 d) $85,221.05 20. What is the internal rate of return (IRR)? a) 12.00% b) 17.99% c) 18.45%
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 9EB: If you invest $15,000 today, how much will you have in (for further instructions on future value in...
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