Net present value and internal rate of return methods
The Hudson Corporation makes an investment of $19,000 that provides the following cash flow:
Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year Cash Flow
1 $ 10,000
2 10,000
3 7,000
a) What is the net present value at 12 percent discount rate? (Round "PV Factor" to 3 decimal places. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)
b) What is the internal rate of return using the interpolation procedure?
c) Would you make the same decision under both parts a and b?