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Can someone help me figure out the rate of return on this?
Posted on 4/25/15 at 10:24 am
Posted on 4/25/15 at 10:24 am
Capital outlay of $30,000 to buy widget.
Sell widget for $55,000 on the terms of $3,500 down with $51,500 financed at 8% over 15 years.
I remember doing a million of these types of scenarios on my HP 12 C in college but can't remember how to do it now.
If you are using an HP12C can you tell me how you input the numbers? Thanks.
Sell widget for $55,000 on the terms of $3,500 down with $51,500 financed at 8% over 15 years.
I remember doing a million of these types of scenarios on my HP 12 C in college but can't remember how to do it now.
If you are using an HP12C can you tell me how you input the numbers? Thanks.
2
Posted on 4/25/15 at 10:55 am to I Love Bama
IRR is 18.5%, assumin I did it right.
I computed fixed payments given your term and used those payments as the next 15 cash flows in conjunction with the 30,000 dollar outlay for the IRR.
I computed fixed payments given your term and used those payments as the next 15 cash flows in conjunction with the 30,000 dollar outlay for the IRR.
Posted on 4/25/15 at 10:56 am to TheHiddenFlask
My mind was telling me around 20% so that seems right. Thanks.
Posted on 4/25/15 at 11:11 am to I Love Bama
Pics of the widget?
Sorry, I just could resist.
Sorry, I just could resist.
Posted on 4/25/15 at 12:17 pm to I Love Bama
No problem. $21,500 NPV assuming an 8% discount rate. Looks like a good deal.
Posted on 4/26/15 at 3:41 pm to TheHiddenFlask
I got 21.48% IRR assuming with cash flows as follows:
T0= -30000 + 3500
T1 - T15 = 6017 (PMT function in excel 8% discount, 15 periods, 51500 PV)
Haven't done one of these since grad school, so I could be off.
T0= -30000 + 3500
T1 - T15 = 6017 (PMT function in excel 8% discount, 15 periods, 51500 PV)
Haven't done one of these since grad school, so I could be off.
This post was edited on 4/26/15 at 3:42 pm
Posted on 4/26/15 at 11:33 pm to GregYoureMyBoyBlue
I missed the 3500. Your number is right.
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