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?

Jiggerman ?

1.  Payback = cost of project / annual cash inflows

Investopedia
?Payback period?
http://www.investopedia.com/terms/p/paybackperiod.asp

In this case is 2.5 years.

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

?IRR?
http://www.investopedia.com/terms/i/irr.asp

Sorry, but I need a spreadsheet for this one:
http://www.mooneyevents.com/jiggerman.xls

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
$34,086.

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

Best regards,

Omnivorous-GA

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