week 5 ENT4412.docx - 1 What is the payback if investment...

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1. What is the payback if investment cost is $45,000 and the after-tax benefit is $2,000?
3. Joe Morton buys a piece of equipment for $200,000. He puts down $40,000 and finances $160,000. Joe’s opportunity cost is 4 percent, and the lender’s interest rate is 8 percent. Find the weighted average cost of capital (WACC).
5. If the 10 percent present value ordinary annuity factor (PVAF) is 8.5136 and the 11 percent, PVAF is 7.9633, a PVAF of 8.1234 correlates to an internal rate of return (IRR) of ________? (
? = ( 1 ) ( 0.3902 ) 0.5503 = 0.7091 IRR = i 1 +? = 10% + 0.7091% ≈ 10.71%

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