Question

Using these data, graph, on the same set of axes, the NPV profiles for each Cooper Electronics uses NPV profiles to visually evaluate competing projects. Key data for the two projects under consideration are given in the following table: project using discount rates of 0%, 8%, and the IRR. The IRR of project Terra is 18.64 %. (Round to two decimal places.) The IRR of project Firma is [%. (Round to two decimal places.) Х i Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) O Initial investment Year Terra Firma $21,000 $25,000 Operating cash inflows $12,000 $6,000 $6,000 $8,000 $6,000 $10,000 $6,000 $12,000 2 3 4 Print Done

Answer 1

IRR is the rate for which NPV equals zero.

IRR of the Firma:

0 = 6000/(1+IRR)^1 + 8000/(1+IRR)^2 + 10000/(1+IRR)^3 + 12000/(1+IRR)^4 - 25000

We will use heat and trial method to get that value for which above equation satisfy.

IRR = 14.47% Answer

Or Using financial calculator:

2nd CF

Cfo = - 25000

CF1 = 6000

CF2 = 8000

CF3 = 10000

CF4 = 12000

IRR -> CPT

IRR = 14.47% Answer

Kindly do inform me in case you have any queries.