Net Present Value - Investment Decision Payback Criterion...

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Unformatted text preview: Investment Decision Payback Criterion $480K Year 1 2 3 4 3 4 $51K $69K $480K $94K $163K $643K $43K $43K CF Sum $51K $69K Catch Up < $325K < $325K < $325K > $325K $43K 0 Years 2 1 -$325K 15% Required Return $325K - $163K = $162K $162K / $480K ≈ 0.34 3 + 0.34 = 3.34 years Is 3.34 years acceptable? Entering Cash Flows 2nd CLR Work Enter ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ ↓ Enter Enter Enter Enter IRR 21.91% IRR CPT CF Internal Rate of Return R IR -$325K > 15% ✔ Net Present Value $43K $51K NP V NPV Enter CPT 15 ↓ $69K NPV $70,764.81 $480K > $0 ✔ ...
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This note was uploaded on 04/05/2011 for the course FIN 350 taught by Professor Debruinne during the Winter '11 term at Grand Valley State University.

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