Question

1.

A project has annual cash flows of $6,000 for the next 10 years and then $6,000 each year for the following 10 years. The IRR of this 20-year project is 13.28%. If the firm's WACC is 9%, what is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

2. Project L costs $53,405.97, its expected cash inflows are $11,000 per year for 11 years, and its WACC is 10%. What is the project's IRR? Round your answer to two decimal places.

3.

Project L costs $40,000, its expected cash inflows are $8,000 per year for 12 years, and its WACC is 11%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

Answer 1

1) We first need to find the intial cash outlay

This can be done by calculating the present value of cash flows at IRR.

Formula Used =NPV(13.28%,B1:B20)

Initial Cash outlay = -$41449.18

Now. we can calculate NPV at 9%

Formula Used =B1+NPV(0.09,B2:B21)

NPV = $13,322.09