Toys and Junk Company Is Evaluating a Capital Expenditure Proposal

question 61

Essay

Toys and Junk Company is evaluating a capital expenditure proposal that requires an initial investment of $16,004 and has predicted cash inflows of $4,000 per year for 15 years.It will have no salvage value.Required:
a.Using a required rate of return rate of 14 percent, determine the net present value of the investment proposal.
b.Determine the proposals internal rate of return.

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