Question

Consider the following two projects: 763,088.5469 Proiect Year 0 Year 1 Year 2 Year 3 Year 4 Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow - 100 40 50 60 N/A - 7330 30 Discount Rate 0.14 0.14 30 The net present value (NPV) of project A is closest to: O A 17.6 O B. 15.5 O C. 14.1 OD 35.1 What is the internal rate of return (IRR) of an investment that requires an initial investment of $11,000 today and pays $15,510 in one year's tim O A. 40% OB. 42% O c. 44% OD. 41%

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

Present value factor

= 1 / ( 1 + Rate of interest) ^ Number of years

So, PV Factor for year 2 will be

= 1 / ( 1.14 ^ 2)

= 1 / 1.2996

= 0.769468

The following table shows the calculations :

Calculations	Years	0	1	2	3	4
A	Cash Flow	-100	40	50	60	0
B	PV Factor	1	0.877193	0.769468	0.674972	0.59208
C = A x B	Present Value	-100.00	35.09	38.47	40.50	0.00
D = Sum C	Net Present Value	14.06

So, the Net Present Value of Project A is closest to $14.1 and so option C is the correct option