Evaluate a capital investment using NPV and IRR models
You wish to purchase a new pizza oven for your restaurant but are unsure if the investment is a good one. The Oven Cost is $100,000 and the oven will last for 7 Years with NO residual Value at the end of that time. You expect to generate $22,000 for the first 3 years and $25,000 for the final 4 years. The loan for the oven will be 9% after taxes and you do not have a tax effect on the income generated.