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    A Project's NPV and IRR

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    A company just paid $10 million for a feasibility study. If the company goes ahead with the project, it must immediately spend another $100 million now, and then spend $20 million in one year. In two years it will receive $80 million, and in three years it will receive $90 million. If the cost of capital for the project is 11 percent, what are the project's NPV and IRR?

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    A company just paid $10 million for a feasibility study. If the company goes ahead with the project, it must immediately spend another $100 million now, and then spend $20 million in one year. In two years it will receive $80 million, and in three years it will receive $90 million. If the cost of capital for the project is 11 percent, what are the project's NPV and IRR?
    Year 0 1 2 3
    I. Investment Outlay
    1. Feasibility study -10,000,000
    2. ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer the project's NPV and IRR.

    $2.19

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