Question

Safari Fichier Edition Présentation Historique Signets Fenêtre Aide ??82 % Chd Jeu. 17:27 a?E Test: Chapter 9 In-class Test Time Remaining: 00:50:34 Submit Test This Question: 1 pt 14 of 20 (7 complete) This Test: 60 pts possible The Rollins Supply Company is considering an expansion pro ect with cash flows as shown below. The cost of capital is 13%. Cala late the n t pr sent al e NPV pro ability index p and inte mai ate of retu RR f this p ect. Cash Flow -$2,100 $1,500 $1,000 $1,800 $1,600 $1,500 Year What is the project's NPV? Round to the nearest cent.) What is the project's P1? Round to bwe decimal plac What is the project's IRR? % (Round to two decimal places.) Enter your answer in each of the answer boxes.

Answer 1

Calculation of NPV: calculation of profitability index[PI] PI = present value of inflows/p.v of outflows = 5153.5204720/2100 = 2.454057 = 2.45 Answer c: calculation of IRR { IRR is the Rate at which P.V of Inflows = P.V of Out flows } \r\n = > let us find P.V of Inflows @ 60% = > Now let us find P.V of Inflow @ 65% therefore IRR = 60% + [5%/139.1511963 times 54.76989743] = 60% + 1.96799% = 61.96799 % = 61.97 % If any doubt, please ask at comments