2009-07-05_055314_rent_and_own

# 2009-07-05_055314_rent_and_own - 2 125000 x 1(1.10)2=103306...

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I need a expert in finance to answer the following questions: 1. Rent-to-Own Equipment Co. is considering a new inventory system that will cost \$450,000. The system is expected to generate a positive cash flow over the next four years in the amounts of \$250,000 on year one, \$125,000 in year two. \$110,000 in year three, and \$80,000 in year four. Rent-to-Own's required rate of return is 10%. What is the net present value of this project? 1 250000 x 1/(1.10) =227272
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Unformatted text preview: 2 125000 x 1/(1.10)2=103306 3 110000 x 1/(1.10)3=82645 4 80000 x x 1/(1.10)4=54641 Total PV = 467864 NPV = 467864-450000=17864 positive NPV 2. A capital budgeting project has a net present value of \$10,000 and a modified internal rate of return of 13%. The project's required rate of return is 11%. The internal rate of return is IRR = 11+ (10000/10000+9823 x(13-11)} = 12% therefore IRR = 12% Calculation of NPV at 13% 10000 x1.11/1.13 =9823...
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## This note was uploaded on 06/20/2011 for the course ACCOUNTING acc101 taught by Professor Joannes during the Spring '11 term at Aarhus Universitet.

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