Sample Question: NPV and IRR

Jones Company's new truck has a cost of $20,000, and it will produce end-of-year net cash inflows of $7,000 per year for 5 years. The cost of capital for an average-risk project like the truck is 8 percent. What is the project's IRR?

Using the information above for IRR, if the required return is 12%, is the project acceptable? Calculate the NPV to answer the question.

Use Excel for the answers to these questions.

Solution Summary

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