Charlie's Hamburgers is considering adding pizza to its menu. The pizza require purchasing cooking equipment on sale for $55,000. The asset has a 6-year life, will produce a cash flow of $17,600 in the first year, $19,000 in the second year, $20, 250 in the third year, $21,750 in the fourth year, 22, 500 in the fifth year, and $23,000 in the sixth year. The cost of capital is 10%. What is the project's Internal Rate of Return (IRR)? Net Present Value (NPV)? and Profitability Index (PI)?

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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Charlie's Hamburgers is considering adding pizza to its menu. The pizza require purchasing cooking equipment on sale for $55,000. The asset has a 6-year life, will produce a cash flow of $17,600 in the first year, $19,000 in the second year, $20, 250 in the third year, $21,750 in the fourth year, 22, 500 in the fifth year, and $23,000 in the sixth year. The cost of capital is 10%. What is the project's Internal Rate of Return (IRR)? Net Present Value (NPV)? and Profitability Index (PI)? 

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