# NPV and IRR: Calculate the highest discount rate before rejecting the project

NPV and IRR. A project that costs $3,000 to install 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 percent? How high can the discount rate be before you would reject the project?

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#### Solution Preview

In this question, we must first calculate the present value of this

project if the discount rate is 10%. The present value would be:

PV = -3000 + 800/1.1 + 800/1.1^2 + 800/1.1^3 + 800/1.1^4 + 800/1.1^5 + 800/1.1^6

Using the formula mentioned in the link under the title of

"Calculating the Present Value of an Ordinary ...

#### Solution Summary

With adequate calculations displayed, the reponse demonstrates how to arrive at the answers to the questions.

$2.19