Problem

Calculating IRR. A project has the following cash flows: YearCash Flow0$ 65,0001−38,000...

Calculating IRR. A project has the following cash flows:

Year

Cash Flow

0

$ 65,000

1

−38,000

2

−34,000

What is the IRR for this project? If the required return is 6 percent, should the  firm accept the project? What is the NPV of this project? What is the NPV of the project if the required return is 0 percent? 24 percent? What is going on here? Sketch the NPV profile to help you with your answer.

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