Share
Explore BrainMass

# Capital Budgeting: Net Present Value & Internal Rate of Return

Consider a project with the following expected cash flows:

Year Cash flow
0 - \$400,000
1 \$100,000
2 \$120,000
3 \$850,000

If the discount rate is 0%, what is the project's net present value?
If the discount rate is 2%, what is the project's net present value?
If the discount rate is 6%, what is the project's net present value?
If the discount rate is 11%, what is the project's net present value?
What is this project's modified internal rate of return?

Consider a project with the expected cash flows:

Year Cash flow
0 -\$815,000
1 \$141,000
2 \$320,000
3 \$440,000

What is this project's internal rate of return?
If the discount rate is 1%, what is this project's net present value?
If the discount rate is 4%, what is this project's net present value?
If the discount rate is 10%, what is this project's net present value?
If the discount rate is 18%, what is this project's net present value?

A project requiring a \$4.2 million investment has a profitability index of 0.94. What is its net present value?

#### Solution Summary

The solution determines the net present value and the internal rate of return.

\$2.19