Any quick, easy way for this problem by calculator? The answer seems omitted much of the detailed work. The ABC company considers investing in either of the two assets. CF data *******Yr 1 ******Yr 2 *******Yr3 Asset A: $36 ******$23 *******$11 Asset B: $26 ******$24 *******$22 A) If interest rate = 10%, how much should ABC pay for each asset? B) Assume the amount from A) is paid for each, what’s the depre. schedule for each asset to generate a constant rate of return?
On HP use the blue CFo/CFj buttons to calculate npv or irr of a series of uneven cashflows. I suggest you read the calculator manual for more details. Or calculate npv manually. It’s only 3 terms. There’s no shortcut for B. For each year find the depreciation that gives a net profit margin of 10%.