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Q: npv ( Answered 4 out of 5 stars,   1 Comment )
Subject: npv
Category: Business and Money > Accounting
Asked by: jiggerman-ga
List Price: $5.00
Posted: 21 Sep 2005 17:30 PDT
Expires: 21 Oct 2005 17:30 PDT
Question ID: 570723
A $100,000 investment returns $40,000 after tax for five years and has
not remaining value.


What is the payback?


What is the internal rate of return?


If the discount rate is 15% what is the Present value?
Subject: Re: npv
Answered By: omnivorous-ga on 22 Sep 2005 04:44 PDT
Rated:4 out of 5 stars
Jiggerman ?

1.  Payback = cost of project / annual cash inflows

?Payback period?

In this case is 2.5 years.

2. IRR is the rate of return that yields an NPV = 0.


Sorry, but I need a spreadsheet for this one:

And the answer is 28.65%

3.	The NPV discounts cash flows by an increasing amount each year
based on the cost of money, which you?ve put at 15%.  So after year 1,
it?s Cash flow / 1.15.  After year 2 it?s Cash flow / (1.15)^2.

It?s easier to set up an NPV factor for these problems ? then just
multiply your cash flows.  We already know that NPV is positive
because you have an IRR greater than 15% -- but the total NPV is

Google search strategy:
"payback period"
IRR "internal rate of return"

Best regards,

jiggerman-ga rated this answer:4 out of 5 stars
very good I'm impressed

Subject: Re: npv
From: magnesium-ga on 22 Sep 2005 16:47 PDT
I'm impressed, too. This looks to me like an excellent answer for the
price offered. If this is a four star answer, what would be required
for five?

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