A project that provides annual cash flows of $2,500 for 10 years costs $11,800 today. |
Required: | |
(a) | If the required return is 10 percent, what is the NPV for this project? |
(b) | Determine the IRR for this project. |
a) NPV for this project is calculated using the PV function:-
=PV(rate,nper,pmt)-intial cost
=PV(10%,10,-2500)-11800
=3561.42
b) IRR of the project:-
=RATE(nper,pmt,pv)
=RATE(10,2500,-11800)
=16.64%
A project that provides annual cash flows of $2,500 for 10 years costs $11,800 today. ...
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