Problem 9-18 NPV and Discount Rates [LO1] An investment has an installed cost of $533,800. The cash flows over the four-year life of the investment are projected to be $215,850, $232,450, $199,110, and $147,820, respectively. a. If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.) b. If the discount rate is infinite, what is the NPV? (A negative answer should be indicated by a minus sign.) c. At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. NPV b. NPV c. IRR %

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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Problem 9-18 NPV and Discount Rates [LO1]
An investment has an installed cost of $533,800. The cash flows over the four-year life
of the investment are projected to be $215,850, $232,450, $199,110, and $147,820,
respectively.
a. If the discount rate is zero, what is the NPV? (Do not round intermediate
calculations.)
b. If the discount rate is infinite, what is the NPV? (A negative answer should be
indicated by a minus sign.)
c. At what discount rate is the NPV just equal to zero? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
a. NPV
b. NPV
c. IRR
%
Transcribed Image Text:Problem 9-18 NPV and Discount Rates [LO1] An investment has an installed cost of $533,800. The cash flows over the four-year life of the investment are projected to be $215,850, $232,450, $199,110, and $147,820, respectively. a. If the discount rate is zero, what is the NPV? (Do not round intermediate calculations.) b. If the discount rate is infinite, what is the NPV? (A negative answer should be indicated by a minus sign.) c. At what discount rate is the NPV just equal to zero? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. NPV b. NPV c. IRR %
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