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    Given cost and cash flows, what is NPV, IRR

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    An investment has a total installed cost of $5,346. The cash flows over the four year life of the investment are projected to be $1,459, $2,012, $2,234, and $1,005.

    a) If the discount rate is zero, what is the NPV?
    b) If the discount rate is infinity, what is the NPV?
    c) What is the IRR on the investment?
    d) Based on these three points, sketch the NPV profile.

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    Solution Preview

    See the attached file for complete solution. The text here may not be copied exactly as some of the symbols / tables may not print. Thanks

    a) If the discount rate is zero, what is the NPV?
    Discount Rate 0%

    Year Cash ...

    Solution Summary

    Shows how to calculate the NPV and IRR for a given cost and cash flow structure.