Question
In: Finance
An investor invests $11000. The investment pays $4000 at the end of year 1, $5000 at...
An investor invests $11000. The investment pays $4000 at the end of year 1, $5000 at the end of year 2 and $4500 at the end of year 3. (a) Calculate the internal rate of return (IRR) of the investment. (b) Calculate the net present value (NPV) of the investment using interest preference rate of 8.5%.
Ans is 10.76% for (a)
Show all works, and please calculate it with math steps AND DON'T USE financial calculator!!your Answer should be in the form of math steps not in Statistic tables. Thank you!
Solutions
Expert Solution
Solution:-
A. First to calculate IRR-
Let Rate = 10%
Net Present Value = Present Value of cash Inflow - Present value of cash outflow
Net Present Value = 
Net Present Value = 
Net Present Value = $149.512
Let Rate = 15%
Net Present Value = Present Value of cash Inflow - Present value of cash outflow
Net Present Value = 
Net Present Value = 
Net Present Value = -$782.198
IRR = 
IRR = 
IRR = 10.80% (approx)
B. To Calculate Net Present Value if Rate 8.50%-
Net Present Value = 
Net Present Value = 
Net Present Value = $457
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jeff jeffy answered 1 year agoRelated Solutions
An investor invests $11000. The investment pays $4000 at the end of year 1, $5000 at...
An investor invests $11000. The investment pays $4000 at the end
of year 1, $5000 at the end of year 2 and $4500 at the end of year
3. (a) Calculate the internal rate of return (IRR) of the
investment. (b) Calculate the net present value (NPV) of the
investment using interest preference rate of 8.5%.
Show all works, and please calculate it with math formula
instead of financial calculator!! Thank you!
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An investor invests $500. The investment pays $100 at the end of
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Calculate the net present value (NPV) of the investment using
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----------------------------------------------
I got
v = 1/1.12
So would it just be NPV = -500 + 100(v)^2 + 200v^3 + 300v^4?
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Show all works, and please show ur work it with math steps and
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