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Intro A project requires an initial investment of $60 million and will then generate the same cash flow every year for 6 year
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Answer #1

NPV = -initial investment + PV of future cash flows

Present value of annuity= payment per period * [1-(1+i)^-n]/i

i = interest rate per period

n = number of periods

=>

at IRR, NPV is zero

=>

0 = -60000000 + cash flow every year * [1-(1+0.19)^-6]/0.19

=>

Cash flow every year = 17596457.53

hence

NPV = -60000000 + 17596457.53 * [1-(1+0.1)^-6]/0.1

= 16637159.93

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