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Calculate each plan's NPV and IRR

) Threadnot, Inc.'s President wants to see the NPV and IRR of each of the above plans. The appropriate discount rate is 20%. Calculate each plan's NPV and IRR.

Year 0 1 2 3
Plan a $-8000 $8,000 $700 $700
plan b $-8000 $900 $900 $10000

Solution Preview

We compute PV for each cash flow by
PV(t) = CF(t) / (1+20%)^t

Plan a PV for a ...

Solution Summary

The solution calculates each plan's NPV and IRR.

$2.19