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Minden Company
Minden Company
Solution
1a. Net present value = -41600 + 14000*(Annuity factor)
Net present value = -41600 + 14000*(1-1/1.11^7)/11%= $ 24371
1b. Yes
2. For IRR, NPV=0
-158860 + 20000*(1-1/(1+IRR)^12)/IRR%=0
IRR = 7.00%
Internal rate of return
7%
3a. For IRR, NPV=0
-14604 + 3000*(1-1/(1+IRR)^7)/IRR%=0
IRR = 10%
3b. No
Internal rate of return 7%
Minden Company      Minden Company    Solution1a- Net present value -.docx

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Minden Company Minden Company Solution1a- Net present value -.docx

  • 1. Minden Company Minden Company Solution 1a. Net present value = -41600 + 14000*(Annuity factor) Net present value = -41600 + 14000*(1-1/1.11^7)/11%= $ 24371 1b. Yes 2. For IRR, NPV=0 -158860 + 20000*(1-1/(1+IRR)^12)/IRR%=0 IRR = 7.00% Internal rate of return 7% 3a. For IRR, NPV=0 -14604 + 3000*(1-1/(1+IRR)^7)/IRR%=0 IRR = 10% 3b. No Internal rate of return 7%