Exercises and Problems
What is the payback if investment cost is $45,000 and the after-tax benefit is
Joe Morton buys a piece of equipment for $200,000.
He puts down $40,000 and
Joe’s opportunity cost is 4 percent, and the lender’s interest rate is
Find the weighted average cost of capital (WACC).
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 ________?
Kay Sadilla is considering investing in a franchise that requires an initial outlay of
She conducted market research and found that after-tax cash flows on the
investment should be about $15,000 per year for the next 7 years.