A project that provides annual cash flows of $12,300 for 11 years costs $79,889 today. ...

A project that provides annual cash flows of $12,300 for 11 years costs $79,889 today.

a. If the required return is 14 percent, what is the NPV for this project?

b. Determine the IRR for this project.

Solutions

Expert Solution

By Interpolation Method
IRR	=	*Lowest Discount Rate + [NPV at Lower rate (Higher Rate - Lower Rate) / (NPV at Lower Rate - NPV at Higher Rate)]**
	=	9% + [3814.96 * (14%-9%) / (3814.96 -(-12820.79)]
	=	9% +[3814.96 *5% /16635.75]
	=	9% + 1.15%
	=	10.15%

jeff jeffy answered 2 months ago

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