Share
Explore BrainMass

Net present value and also the internal rate of return

I need to find out the net present value of the cash flows and also the internal rate of return on the cash flows. Here are some more info:

The purchase price of the company is $5.74 million dollars and it as
shown as an "addition to PP&E" in year 0

- The $2.7 million dollar inflow in year 1 shown under "disposals of
PP&E" is the result of equipment that your company will sell after it
acquires the equipment from the company.

-Subsequent disposals in years 4, 8, & 12 are for other pieces of
equipment that your company will sell off as it becomes worn out.

- Your discount rate (hurdle rate) for purposes of this assignment is
13%.
- Your company has a September 30th year end, hence the September 30th
year end dates.

- The terminal value or horizon value shown in year 15 is based upon the
salvage value of the equipment remaining at the end of year 15.

Attachments

Solution Preview

I need to find out the net present value of the cash flows and also the internal rate of return on the cash flows. Here are some more info:

The purchase price of the company is $5.74 million dollars and it as
shown as an ...

Solution Summary

This provides the steps to calculate the Net present value of the cash flows and also the internal rate of return on the cash flows

$2.19