NPV and IRR. A project that costs $3,000 to install will provide annual cash flows of $800 for each of the next 6 years. Is this project worth pursuing if the discount rate is 10 percent? How high can the discount rate be before you would reject the project?© BrainMass Inc. brainmass.com June 3, 2020, 6:35 pm ad1c9bdddf
Initial cost= $3,000
We need to find the present value of annuity of $800
PVIFA (6 periods, 10.% rate ) = 4.355261
Therefore PV= $3,484 =4.355261 x $800
(PVIFA= Present Value Interest Factor for an ...
Calculates NPV of the project at the given discount rate and the discount rate at which the project is rejected.