IRR is the rate at which NPV is zero
using the excel IRR function
IRR = IRR(-20000, 7500,7500,7500,7500)
= 18.5%
Question 2 (1 point) You purchase machinery for $20,000 that generates after-tax cash flows of $7,500...
You purchase machinery for $20,000 that generates after-tax cash flows of $7,500 annually for the next 4 years. The cost of capital (WACC) is 12.59%. What is the IRR for this project? The IRR cannot be determined. 18.5% 13.2% 0 12.6%
You purchase machinery for $33,000 that generates after-tax cash flows of $10,000 annually for the next 4 years. The cost of capital (WACC) is 6.56%. What is the NPV for this project?
A project has annual cash flows of $7,500 for the next 10 years and then $10,000 each year for the following 10 years. The IRR of this 20-year project is 12.88%. If the firm's WACC is 11%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.
Question 5 You are considering a project with the following after-tax cash flows (in millions of dollars): Years from Now After-tax CF 0 -50 1-4 10 5 30 Suppose the project is only financed by equity and its beta is 1.2. Given Rf = 3% and E(RM) = 10%, you’d use the CAPM to estimate the (equity) cost of capital. What is the NPV of the project? ______ millions
Question 7 5 pts Use the following after-tax cash flows for project A and B to answer the following question: (Numbers in parentheses are negative cash flows). These two projects are independent Year Cash Flow of A Cash Flow of B 0 ($2,400) ($4,500) 1 $999 $800 2 $950 $950 3 ($150) $950 $910 $800 5 $990 $900 6 ($500) $1980 What is the approximate payback of project B if the required rate of return is 10%? 4.56 years 6...
6. Use the following after-tax cash flows for project A and B to answer the following question: (Numbers in parentheses are negative cash flows). These two projects are independent. Year Cash Flow of A Cash Flow of B 0 ($2,400) ($4,500) 1 $999 $800 2 $950 $950 3 ( $150) $950 4 $910 $800 5 $990 $900 6 ( $500) $1980 What is the approximate IRR of project A if the required rate of...
4. Consider a ten-year project with an after-tax cash flow of $11 in year t=1. You expect a constant growth rate of g=10% for the next ten years. The initial outflow is $100 in year t=0. (a) What is the internal rate of return (IRR) on the project? (b) According to the IRR rule, would you invest in this project at a cost of capital equal to 5%? (c) A project can have only one NPV but multiple IRRs. True...
you are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $84k at the end of each of yhe next five years, plus an additional $1,000k at the end of the fifth year as the final cash flow. you can purchase this project for $608 k. if your firms cost of capital (aka required rate of return) is 12.5% what is the NPV of this project?
1. Consider two projects with the following (after-tax) cash flows. Project A: CF1 50, CF2 55, CF3 85. Project B: CF1 140. Both projects require an initial investment of 100. Assume the cost of capital for both projects is r 5%. (a) Compute NPV and IRR for project A. (b) Compute NPV and IRR for project B. (c) Assume you replicate project B twice, i.e. reinvest 100 in t 1 and t2. Compute the NPV and IRR of the replicated...
question #8 A project is expected to generate the following cash flows: Year Project after-tax cash flows on nimi -$350 150 -25 300 The project's cost of capital is 10%, calculate this project's MIRR. Fill in the blank