20.) A project has annual cash flows of $3,000 for the next 10 years and then...

20.) A project has annual cash flows of $3,000 for the next 10 years and then $9,500 each year for the following 10 years. The IRR of this 20-year project is 8.43%. If the firm's WACC is 8%, what is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

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Expert Solution

When Discounting Future cash flows at IRR rate then Valeu of initial investment is determined. So value of initial investment is calculated in excel by discounting future cash flows at IRR rate:

Value of initial investment is $47,579.73.

Now, Value of NPV at WACC discount rate is calculated in excel and screen shot provided below:

NPV of project is $2,077.14.

jeff jeffy answered 1 year ago

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