NPV and IRR
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A project has the following cash flows:
Year Cash Flow
0 $65,200
1 -31,200
2 -49,100
Required:
(a)What is the IRR for this project? (Do not include the percent sign (%). Round your answer to 2 decimal places, e.g. 32.16.)
IRR ___?____ percent
(b)
(i)What is the NPV of this project, if the required return is 10 percent? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places, e.g. 32.16.)
NPV $__?___
(ii)Should the firm accept the project?
Yes? ______
or
No? ______
(c)What is the NPV of the project if the required return is 0 and 20 percent? (Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places, e.g. 32.16.)
NPV at 0 percent $ ____?____
NPV at 20 percent $ ____?____
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Solution Summary
Calculates NPV and IRR of projects.
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A project has the following cash flows:
Year Cash Flow
0 $65,200
1 -31,200
2 -49,100
Required:
(a)What is the IRR for this project? (Do not include the percent sign (%). Round your answer to 2 decimal places, e.g. 32.16.)
IRR _13.94__ percent
IRR (Internal Rate of Return)
IRR (Internal rate of return) is calculated using Excel function IRR
Year Cash flow
0 $65,200
1 ($31,200)
2 ($49,100)
IRR= 13.94%
We can check whether the answer is correct by discounting the cash flow at IRR rate, NPV then should be zero
Year Cash flow Discount ...
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