Joel Hodge, CFO of Kleiser Enterprises, is evaluating an opportunity to invest in additional manufacturing equipment that will enable the company to increase its net cash inflows by $600,000 per year. The equipment costs $1,794,367.20. It is expected to have a five-year useful life and a zero salvage value. Kleiser's cost of capital is 18 percent.

Using a spreadsheet program like Excel, calculate the NPV and IRR of the following scenario:
Cost (Year 0): 10,000.
Year 1 Return: 3,000.
Year 2 Return: 3,000.
Year 3 Return: 5,000.
Discount Rate: 10%.

Question -For independent projects, is it true that if PI>0, then NPV>0, and IRR>K?
Is my answer correct?
PI= (I+NPV) / I where I=Investment
if PI>0 then {(I+NPV) / I}>0 which means NPV> -I meaning NPV>0 where <0>
is the limit of I
NPV=0={C1 / (1+IRR)}-I={C1 / (1+k)}-I where C1 is the expected future net
cash flo

A firm is considering an investment in a new machine with a price of $2 million to replace its existing machine. The current machine has a book value of a $1 million and a market value of $9 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm

A project that I am working on has a cost of $275,000 and is expected to provide after-tax annual cash flows of $73,306 for eight years. The firm's management is uncomfortable with theIRR reinvestment assumption and prefers the modified IRR approach. I calculated a cost of capital for the firm of 12 percent. What is the proj

A firm evaluates all of its projects by applying theIRR rule. If the required return is 18 percent, should the firm accept the following project?
Year Cash Flow
0 -$30,000
1 13,000
2 19,000
3 12,000

Rockmont Recreation Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a projected IRR can be less than the WACC (and even negative), in which case it will be rejected.
Year: 0 1 2 3 4
Cash flows: -$1,000 $250 $23

Based on the numbers in the spreadsheet (see attachment):
What would theIRR be if NPV was 0? (for both the equity case and the leveraged case)?
And the Discounted Payback would be for how many years?

You are considering opening a new plant. The plant will cost $100 million upfront and will take one year to build. After that, it is expected to produce profits of $30 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this opportunity if your cost of capital is

Project with the following cash flow. What is the project's IRR? The project projected IRR can be less that the WACC (and even negative) in which case it will be rejected.
Year: 0 1 2 3 4
Cash Flow: -1000. $250. $230 $210 $190

For each of the projects shown in the following table, calculate the internal rate of return (IRR).
Intial Cash Outflow Prjct A Prjct B Prjct C Prjct D
$72,000 440,000 18,000 215,00
Inflows in year
1 16,000 135,000 7,000 108,00