Solutions to Chapter 1

The project will be rejected for any discount rate above this rate. 18. a. The present value of the savings is: 100/r. r = 0.08 ( PV = $1,250 and NPV = –$1,000 + $1,250 = $250. r = 0.10 ( PV = $1,000 and NPV = –$1,000 + $1,000 = $0. IRR = 0.10 = 10%. At this discount rate, NPV = $0. c. Payback period = 10 years. Solutions to Chapter 8 ................
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