Peddler Products Inc.requires all capital investments to generate an internal rate of return of 14 per cent.The company is currently considering an investment that is expected to generate annual cash inflows of $25 000 for 5 years.
Required: What amount should the cost of the investment not exceed? Show computations and ignore income taxes.

Question

Quizplus · Accepted Answer

The Answer of Peddler Products Inc.requires all capital investments to generate an internal rate of return of 14 per cent.The company is currently considering an investment that is expected to generate annual cash inflows of $25 000 for 5 years.
Required: What amount should the cost of the investment not exceed? Show computations and ignore income taxes.