Question

A project has the following cash flows:

Year	Cash Flow
0	$	47,000
1	–	26,000
2	–	37,000

What is the IRR for this project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

IRR

%

What is the NPV of this project, if the required return is 12 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

$

What is the NPV of the project if the required return is 0 percent? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign.)

NPV

$

What is the NPV of the project if the required return is 24 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

$

Answer 1

1.Internal rate of return is calculated using a financial calculator by inputting the below:

• Press the CF button.
• CF0= $47,000.
• Cash flow for each year should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow cash flow, press the IRR and CPT button to get the IRR of the project.

The IRR of project is 20.60%.

2.Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

• Press the CF button.
• CF0= -$47,000. It is entered with a negative sign since it is a cash outflow.
• Cash flow for all the years should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow, press the NPV button and enter the required return of 12%.
• Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 12% required return is -$5,710.46.

3.Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

• Press the CF button.
• CF0= -$47,000. It is entered with a negative sign since it is a cash outflow.
• Cash flow for all the years should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow, press the NPV button and enter the required return of 0%.
• Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 0% required return is -$16,000.

4. Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

• Press the CF button.
• CF0= -$47,000. It is entered with a negative sign since it is a cash outflow.
• Cash flow for all the years should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow, press the NPV button and enter the required return of 24%.
• Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 24% required return is $1,968.78.

In case of any query, kindly comment on the solution.