Info

Operating cash flow Change in NWC Capital spending

$ 45,000 - 200,000

$56,100

$56,100

$56,100

$56,100 - 45,000 18,300

Total cash flow

-$155,000

$56,100

$56,100

$56,100

$29,400

At 16 percent, the NPV is -$12,768, so the investment is not attractive. After some trial and error, we find that the NPV is zero when the discount rate is 11.48 percent, so the IRR on this investment is about 11.5 percent.

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