Question

A project has the following cash flows: Year Cash Flow $112,000 - 67,000 - 57,000 N- a. What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the NPV of this project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV of the project if the required return is O percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the NPV of the project if the required return is 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Internal rate of return b. Net present value c. Net present value d. Net present value

Answer 1

Year	Project Cash Flows (i)	DF@ 10%	DF@ 10% (ii)	PV of Project ( (i) * (ii) )	DF@ 0% (iii)	PV of Project A ( (i) * (iii) )	DF@ 24% (iv)	PV of Project A ( (i) * (iv) )
0	112000	1	1	1,12,000.00	1	1,12,000.00	1	1,12,000.00
1	-67000	1/((1+10%)^1)	0.909	(60,909.09)	1.000	(67,000.00)	0.806	(54,032.26)
2	-57000	1/((1+10%)^2)	0.826	(47,107.44)	1.000	(57,000.00)	0.650	(37,070.76)
	7.27%	NPV		3,983.47	NPV	(12,000.00)	NPV	20,896.98
a)	IRR =	Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
		0% + 12000 / (12000 + 3983.47)*10%
		7.27%
b)	NPV @ 10%	3,983.47
c)	NPV @ 0%	-12000.00
d)	NPV @ 24%	20,896.98