Refer to Present Value Tables

question 29

Essay

Refer to Present Value Tables. Pitcher Company is considering an investment costing $120,000. The investment would return $50,000 per year in each of three years. The company requires a minimum rate of return of 10%.
Required:
A. Calculate the payback period for the investment.
B. Using the Present Value of an Annuity of $1 table, calculate the net present value of the investment.
C. The internal rate of return is greater than __________________% and less than __________________%.
D. Now assume that the investment includes equipment that can be sold at the end of the third year for $10,000. Calculate the present value of this investment.

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Definitions:

Commercial Software

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Automatic Recalculation

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