NPV & IRR: Formula + TI BA II Plus + Excel – Equipment Purchase & Residual value
Calculating the NPV and IRR: A piece of equipment purchased today for $20,000 can generate the following cash flows over 4 years:
Year 1: $5,500
Year 2: $7,000
Year 3: $8,000
Year 4: $4,500
At the end of Year 4, the equipment can be sold for $3,500. Assume an 8% required rate of return.
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