Question

In: Finance

Project B has the following Cash Flows: Cost = $800,000; Year 1 = $329,000; Year 2...

Project B has the following Cash Flows: Cost = $800,000; Year 1 = $329,000; Year 2 = $260,750; Year 3 = $192,500; Year 4 = $147,000; Year 5 = $101,500. Calculate the Internal Rate of Return for Project B.

Solutions

Expert Solution

Ans 11.36%

Year Project Cash Flows (i) DF@ 10% DF@ 10% (ii) PV of Project ( (i) * (ii) ) DF@ 20% (iii) PV of Project ( (i) * (iii) )
0 -800000 1 1                             (8,00,000) 1               (8,00,000)
1 329000 1/((1+10%)^1) 0.909091                               2,99,091 0.833                  2,74,167
2 260750 1/((1+10%)^2) 0.826446                               2,15,496 0.694                  1,81,076
3 192500 1/((1+10%)^3) 0.751315                               1,44,628 0.579                  1,11,400
4 147000 1/((1+10%)^4) 0.683013                               1,00,403 0.482                     70,891
5 101500 1/((1+10%)^5) 0.620921                                   63,024 0.402                     40,791
NPV                                   22,641 NPV               (1,21,675)
IRR = Ra + NPVa / (NPVa - NPVb) * (Rb - Ra)
10% + 22641 / (22641 + 121675)*10%
11.36%

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Project B has the following Cash Flows: Cost = $800,000; Year 1 = $329,000; Year 2...
Project B has the following Cash Flows: Cost = $800,000; Year 1 = $329,000; Year 2 = $260,750; Year 3 = $192,500; Year 4 = $147,000; Year 5 = $101,500. Calculate the Net Present Value when using a WACC of 8.28%.
A project has the following cash flows : Year Cash Flows 0 −$12,000 1 5,290 2...
A project has the following cash flows : Year Cash Flows 0 −$12,000 1 5,290 2 7,630 3 5,040 4 −1,580 Assuming the appropriate interest rate is 10 percent, what is the MIRR for this project using the discounting approach? 19.21% 15.23% 13.96% 11.63% 17.77%
A project has the following cash flows : Year Cash Flows 0 −$11,700 1 5,110 2...
A project has the following cash flows : Year Cash Flows 0 −$11,700 1 5,110 2 7,360 3 4,800 4 −1,640 Assuming the appropriate interest rate is 7 percent, what is the MIRR for this project using the discounting approach?
A project has the following cash flows: Year Cash Flows 0 −$127,800 1 47,000 2 63,800...
A project has the following cash flows: Year Cash Flows 0 −$127,800 1 47,000 2 63,800 3 51,600 4 28,100 The required return is 8.3 percent. What is the profitability index for this project?
1) A project has the following cash flows: Year 0 -$22,500, Year 1 $12,650, Year 2...
1) A project has the following cash flows: Year 0 -$22,500, Year 1 $12,650, Year 2 $10,900, and Year 3 $6,500. What is the IRR of the project? Please round your answer to two decimal places. 2) Following question 1, suppose the cost of capital is 15%. Would you accept or reject the project according to the IRR criterion? Accept or Reject 3) Following questions 1 and 2, which of the following statements about the IRR rule is false? -...
A project has the following cash flows: Year Cash Flow 0 –$ 16,100 1 6,800 2...
A project has the following cash flows: Year Cash Flow 0 –$ 16,100 1 6,800 2 8,100 3 6,600 What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) NPV $ What is the NPV at a discount rate of 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ What is the NPV...
A project has the following cash flows: Year Cash Flow 0 $ 73,000 1 –54,000 2...
A project has the following cash flows: Year Cash Flow 0 $ 73,000 1 –54,000 2 –27,600 What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return             % What is the NPV of this project if the required return is 5 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round...
A project has the following cash flows:    Year Cash Flow 0 $64,100 1 –30,100 2...
A project has the following cash flows:    Year Cash Flow 0 $64,100 1 –30,100 2 –48,100    a. What is the IRR for this project?    b. What is the NPV of this project, if the required return is 11.5 percent?    c. NPV at 0 percent?    d. NPV at 23 percent?
A project has the following cash flows: Year Cash Flow 0 –$ 15,600 1 6,300 2...
A project has the following cash flows: Year Cash Flow 0 –$ 15,600 1 6,300 2 7,600 3 6,100     What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)      NPV $       What is the NPV at a discount rate of 9 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)      NPV $   ...
Project A has the following Cash Flows: Cost = $1,200,000; Cash flows the following years as...
Project A has the following Cash Flows: Cost = $1,200,000; Cash flows the following years as follows: Year 1 = $274,600; Year 2 = $298,000; Year 3 = $303,950; Year 4 = $312,875; and Year 5 = $374,600. Calculate the Traditional Payback. Assume cash flows are even throughout the year. Calculate the Net Present Value using the WACC = 8.28%.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT