Question

You can purchase an asset today for $10,000. If you purchase the asset, you will receive a net incremental cash flow of $1600 at the end of each of the next 10 years. What is the Internal Rate of Return and Net Present value with a discount rate of 8%?

Please show in excel. Thank you!  

Answer 1

A В C 1 Cash Flow Year 0($10,000) $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 2 3 1 2 3 6 4 7 5 8 6 9 10 11 12 10 13 14 Discount Rate 15 NPV 8% $736.13 16 IRR 9.61% 17 7

A В Cash Flow Year 2 0 -10000 3 1 1600 4 2 1600 5 3 1600 6 4 1600 7 5 1600 8 6 1600 9 7 1600 10 8 1600 11 9 1600 12 10 1600 13 14 Discount Rate 0.08 15 NPV =NPV(B14,B3:B12)+B2 16 IRR =IRR(B2:B12) 17 18 19