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.

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 9 months ago

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