Rieger International is evaluating the feasibility of investing $103,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table attached. he firm has a cost of capital of 9%. a. Calculate the payback period for the proposed investment. b. Calculate the discounted payback period for the proposed investment. c. Calculate the net present value (NPV) for the proposed investment. d. Calculate the probability index for the proposed investment. e. Calculate the internal rate of return (IRR) for the proposed investment. f. Calculate the modified internal rate of return (MIRR) for the proposed investment. g. Evaluate the acceptability of the proposed investment using NPV, IRR, and MIRR.
Rieger International is evaluating the feasibility of investing $103,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown in the following table attached. he firm has a cost of capital of 9%. a. Calculate the payback period for the proposed investment. b. Calculate the discounted payback period for the proposed investment. c. Calculate the net present value (NPV) for the proposed investment. d. Calculate the probability index for the proposed investment. e. Calculate the internal rate of return (IRR) for the proposed investment. f. Calculate the modified internal rate of return (MIRR) for the proposed investment. g. Evaluate the acceptability of the proposed investment using NPV, IRR, and MIRR.
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
Section: Chapter Questions
Problem 1PS
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Rieger International is evaluating the feasibility of investing $103,000 in a piece of equipment that has a 5-year life. The firm has estimated the
a. Calculate the payback period for the proposed investment.
b. Calculate the discounted payback period for the proposed investment.
c. Calculate the net present value (NPV) for the proposed investment.
d. Calculate the probability index for the proposed investment.
e. Calculate the internal rate of return (IRR) for the proposed investment.
f. Calculate the modified internal rate of return (MIRR) for the proposed investment.
g. Evaluate the acceptability of the proposed investment using NPV, IRR, and MIRR.
Transcribed Image Text:Data table
(Click on the icon here in order to copy the contents of the data table below
into a spreadsheet.)
Year (t)
Cash inflows (CF,)
1
$35,000
$25,000
3
$25,000
4
$40,000
$25,000
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