Question

Problem 10-8

Calculate the NPV at 8% and the IRR for the following projects. Round the answers to two decimal places. Use a minus sign to indicate a negative NPV.

1. An initial outlay of $69,724 and an inflow of $15,000 followed by four consecutive inflows of $17,000. Do not round intermediate calculations. Round PVF and PVFA values in intermediate calculations to four decimal places.

   NPV	$
   IRR	%

2. An initial outlay of $25,424 followed by two zero cash years and then four years of inflows at $10,500. Do not round intermediate calculations. Round PVF and PVFA values in intermediate calculations to four decimal places.

   NPV	$
   IRR	%

3. An outlay of $10,672 followed by another outlay of $5,000 followed by five inflows of $5,000. Do not round intermediate calculations. Round PVF and PVFA values in intermediate calculations to four decimal places.

   NPV	$
   IRR	%

Answer 1

NPV = PV of Cash Inflows - Cash Outflow

a) NPV = $(3,699.7812)
IRR = 5.9997%

b) NPV = $4391.9566
IRR = 12.0002%

c) NPV = $3,183.1391
IRR = 13.9987%