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    Solution to "NPV and IRR" question

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    NPV/IRR. Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual growing stream of cash flows. Cash flow at the end of this year will be $5,000, and cash flows in future years are expected to grow indefinitely at an annual rate of 5 percent. a. If the discount rate for this project is 10 percent, what is the project NPV? b. What is the project IRR?

    Please show excel sheet and formulas. I had OTA 102799 help me with this but did not get the formula or excel. Original answer for NPV was $20,000 - not sure if this is correct or not?

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    We can find the NPV in 2 ways: 1 way is through Excel formulae (see the attached sheet). The other and more rigorous way ...