Purchase Solution

NPV, IRR and Payback

Not what you're looking for?

Ask Custom Question

If you insulate your office for $10,000, you will save $1,000 a year in heating expenses. These savings will last forever.

a. What is the NPV of the investment when the cost of capital is 8%? 10%?
b. What is the IRR of the investment?
c. What is the payback period on this investment?

Show your work.

Purchase this Solution

Solution Summary

The solution explains the calculation of NPV, IRR and payback

Solution Preview

a. What is the NPV of the investment when the cost of capital is 8%? 10%?

NPV = PV of inflows - initial investment
The inflows are a perpetuity and so the present value is given ...

Purchase this Solution


Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.