Homework Answers
| CF | |||
| IRR is the rate at which NPV =0 | |||
| IRR | 0.131554826 | ||
| Year | 0 | 1 | 2 |
| Cash flow stream | 64000 | -30000 | -48000 |
| Discounting factor | 1 | 1.131555 | 1.280416 |
| Discounted cash flows project | 64000 | -26512.2 | -37487.8 |
| NPV = Sum of discounted cash flows | |||
| NPV CF = | -2.72469E-06 | ||
| Where | |||
| Discounting factor = | (1 + IRR)^(Corresponding period in years) | ||
| Discounted Cashflow= | Cash flow stream/discounting factor | ||
| IRR= | 13.16% | ||
| Reject project as IRR is more than discount rate | |||
| CF | |||
| Discount rate | 0.12 | ||
| Year | 0 | 1 | 2 |
| Cash flow stream | 64000 | -30000 | -48000 |
| Discounting factor | 1 | 1.12 | 1.2544 |
| Discounted cash flows project | 64000 | -26785.7 | -38265.3 |
| NPV = Sum of discounted cash flows | |||
| NPV CF = | -1051.02 | ||
| Where | |||
| Discounting factor = | (1 + discount rate)^(Corresponding period in years) | ||
| Discounted Cashflow= | Cash flow stream/discounting factor | ||
| Reject project as NPV is negative | |||
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