Harry Corp buys equipment for $224,888 that will last for 9 years.

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Harry Corp buys equipment for $224,888 that will last for 9 years. The equipment will generate cash flows of

$36,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 10% required rate of return.

(a) What is the Present Value (PV) of this investment (at 10%)?.

(b) What is the NET Present Value (NPV) of this investment?  If you need 10%, should you buy the equipment?

(c) What is the Internal Rate of Return (IRR) of this investment?

(d) What is the payback period?

 
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Don owns, directly and indirectly, 150 shares in Pipe Corporation

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Don owns, directly and indirectly, 150 shares in Pipe Corporation.Carl owns, directly and

indirectly, 90 shares in Pipe Corporation.

Invert Partnership owns, directly and indirectly, 150 shares in Pipe Corporation.

 
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No recognized gain and basis of $400,000 Recognized gain of $200,000 and basis of $400,000 Recognized gain of $200,000 and basis of $200,000

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No recognized gain and basis of $400,000Recognized gain of $200,000 and basis of

$400,000

Recognized gain of $200,000 and basis of $200,000

 
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$146,000 $144,000 $196,000

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$146,000$144,000$196,000

 
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