Homework Answers
Ans D. 19%
| Year | Project Cash Flows (i) | DF@ 5% | DF@ 5% (ii) | PV of Project ( (i) * (ii) ) | DF@ 25% (iii) | PV of Project ( (i) * (iii) ) |
| 0 | -4500000.00 | 1 | 1 | (45,00,000) | 1 | (45,00,000) |
| 1 | 1383750.00 | 1/((1+5%)^1) | 0.952 | 13,17,857 | 0.800 | 11,07,000 |
| 2 | 982523.71 | 1/((1+5%)^2) | 0.907 | 8,91,178 | 0.640 | 6,28,815 |
| 3 | 598528.45 | 1/((1+5%)^3) | 0.864 | 5,17,031 | 0.512 | 3,06,447 |
| 4 | 450000.00 | 1/((1+5%)^4) | 0.823 | 3,70,216 | 0.410 | 1,84,320 |
| 5 | 4950000.00 | 1/((1+5%)^5) | 0.784 | 38,78,455 | 0.328 | 16,22,016 |
| PV | 24,74,737 | NPV | (6,51,402) | |||
| IRR = | Ra + NPVa / (NPVa - NPVb) * (Rb - Ra) | |||||
| 5% + 2474737 / (2474737 + 651402)*20% | ||||||
| 19% | ||||||
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