Page 6 - Test
P. 6
8. Amount needed to borrow = 350,000 – 50,000 = $300,000
300,000 - C - C - C
…
year 0 1 2 30
With interest rate of 7%, NPV = 0.
30
1
= 300,000 − ∗ 1 −
7% 1 + 7%
Annual payment, C = $24,176
9.
32,500 - 10,000 - 10,000 - 10,000 - 10,000
year 0 1 2 3 4
4
10,000 1
= 32,500 − ∗ 1 −
1 +
As IRR definition, NPV = 0.
4
10,000 1
32,500 = ∗ 1 −
1 +
IRR = 8.86%
