habanero
41 answers
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Finance Question

A company wants to purchase a piece of equipment for 140000 which will also cost them 10000 to install the piece of equipment. If this company's cash flow for this year is 400000 and after the purchase of this equipment will cause a 4% increase every year for the next five years, what is the equipment's IRR?


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sl
14 answers
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Managing information is a great advantage.

Hi there

When you say a 4% increase every year, do you mean 4% first year 8% second, 12%, 16%, 20% or 4% for all 5 years? if its is the first, is it adding 4% to the base (400K) or to the previous year? what happens after the five years; doest it go back to 400K?
Posted 2 years ago ( permalink )
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sl was invited by Yedda to answer this question.

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salut

 
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whleung
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4% of what?  interest rate? cash flow?

 please clarify
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