Question

In: Accounting

a)What weakness does the NPV method have that is not present in the payback method? -The...

a)What weakness does the NPV method have that is not present in the payback method?

-The NPV method is easier to understand.

-Initial cash flows are ignored.

-It requires estimating the cost of capital.

-It takes into account the time value of money.

b)A dealer offers you financing to purchase a car priced at $11,000. Under the finance plan, you would pay $2,500 now and $2,500 at the end of each year for 5 years. The finance plan has an implied annual interest rate (to the nearest percent) of_________

Solutions

Expert Solution

]Rounding the rate of return to the nearest % = 14%

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ekkarill92 answered 2 years ago
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