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?
Solution Preview
We can find the NPV in 2 ways: 1 way is through Excel formulae (see the attached sheet). The other and more rigorous way ...
Which of the following statements is incorrect?
a. Assuming a project has normal cash flows, the NPV will be positive if the IRR is less than the cost of capital.
b. If the multiple IRR problem does not exist, any independent project acceptable by the NPV method will also be acceptable by the IRR method.
c. If IRR = k
Look at the net present value (NPV) equation (11-1) in your text Fundamentals of Financial Management and the cash flow time line below the formula. In your own words, explain each term of the NPV equation. Explain how you would arrive at the discounted cash flows for each year represented within the time line. How does this cal
) 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
A. Calculate the NPV and IRR for each project. The company's WACC is 10%.
b. Assume only one percent can be undertakeen. Which project would you recommend and why would you?
The projected cash flows for two mutually exclusive projects are as follows:
Year Project A Project B
0 ($150,000) ($150,000)
1 0 50,000
2 0 50,000
3 0 50,000
4 0 50,000
5 250,000
Please view attachment for question.
a. Calculate the NPV, IRR, Profitability Index, and MIRR for this project with a cost of capital of 12%.
(see attached)
b.For a single conventional project, the NPV and IRR will agree on whether to invest or to not invest. However, in the case of two mutually exclusive projects, th
A project that costs 3,000 will provide annual cash flows of $800 for each of the next 6 years. Is this project worth pursuing if the discount rate is 10%? How high can the discount rate be before you reject the project?
If the NPV of a project with conventional cash flow is $500 and the required rate of return is 8%, the IRR must be:
A) equal to $500
B) Less than 8%
C) equal to 8%
d) greater than 8%
e) not enough information provided to accurately choose one of the answers above
