Question - Salt River Company is evaluating a capital expenditure proposal that has the following predicted cash flows:
|
Initial investment
|
$ (42,070)
|
|
Operation
|
|
|
Year 1
|
20,000
|
|
Year 2
|
30,000
|
|
Year 3
|
10,000
|
|
Salvage
|
0
|
(a) Using a discount rate of 14 percent, determine the net present value of the investment proposal.
(b) Determine the proposal's internal rate of return.