You are presented with a proposal for a project. The bottom line is that is claimed that if you invest 20 million in a project for this year, you will receive 5 million, 18 million, and 12 million over the following three years
b. You decide that most likely the project will cost 24 million this year and return 4 million, 14 million and 10 million over the next three years. What would be the net present values and the internal rate of return?© BrainMass Inc. brainmass.com October 17, 2018, 2:27 am ad1c9bdddf
Please refer attached file for better clarity of tables and formulas used.
a. Set up a worksheet that will tell you both the net present value of this project assuming a 12% discount rate and the internal rate of return for this project.
Year End Cash flow, $ million PV factor, PVF PV , $ million
n C 1/(1+r)^n C*PVF
Solution describes the steps to calculate NPV and IRR of given investment proposal.
Should investment be made in the given project?
A project costs $19,000 and promises the following cash flows:
Year 1 $12,500
Year 2 $ 6,000
Year 3 $ 3,000
The appropriate discount rate is 15% per year. Should you invest in this project?
Solve the problem and write a 50-100 word response explaining the results you obtained for the selected question.