Question

Consider the following cash flows: Ce C1 C2 C3 C4 +$37 +$37 +$37 $41 $74 a. Which two of the following rates are the IRRS of this project? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) 2.5% 8.1% 14.3% 31.9% 40.0% b,c &d. What is project NPV if the discount rates are 6%, 20%, 40%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 3 decimal places.) Discount Rate NPV b. 6% 20% C. d. 40%

Answer 1

rate positively ..

		i	ii	iii	iv	v=i*ii	vi=i*iii	vii=i*iv
	Year	Cash flow	PVIF @6%	PVIF @20%	PVIF @40%	Present value @ 6%	Present value @ 20%	Present value @ 40%
	0	-41	1.0000	1.0000	1.0000	(41.000)	(41.000)	(41.000)
	1	37	0.9434	0.8333	0.7143	34.906	30.833	26.429
	2	37	0.8900	0.6944	0.5102	32.930	25.694	18.878
	3	37	0.8396	0.5787	0.3644	31.066	21.412	13.484
	4	-74	0.7921	0.4823	0.2603	(58.615)	(35.687)	(19.263)
						(0.713)	1.253	(1.473)
Ans a)	IRR 1=	8.1%
	IRR 2=	31.9%
	Correct answers are option 8.1% and 31.9%
Ans b)c )& d
		Ans b=	(0.7135)
		Ans c=	1.2531
		Ans d=	(1.4727)