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# Online professor's response to: NPV and IRR

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Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is \$18,250, and the project is expected to yield after-tax cash inflows of \$4,000 per year for 7 years. The has a 10% cost of capital.
a) Determine the net present value (NPV) for the project
b) Determine the internal rate of return (IRR) for the project
c) Would you recommend that the firm accept or reject the project? Explain your answer.

#### Solution Preview

The answer is in the attached file.

Benson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is \$18,250, and the project is expected to yield after-tax cash inflows of \$4,000 per year for 7 years. The has a 10% cost of capital.

a) Determine the net present value (NPV) for the project

Since the cash inflows are the same over the years (it is an annuity) we can use PVIFA to calculate NPV
PVIFA= Present ...

#### Solution Summary

Determines the NPV and IRR of a project.

\$2.19