Hello! Is there an excel formula that would help me find this? I know the Npv ne
ID: 2615214 • Letter: H
Question
Hello! Is there an excel formula that would help me find this? I know the Npv needs the initial investment but I don't know how to find that. Thank you!
pia com/at/servlet/quiz/quiz action-takeQuiz&quiz; probGuid-ONAPCOA80101000000411ac760080000 ct kemoPEM B35 File ConweTikets-Al temsO emar Zendesk Olegacy-Phe Singl Sy Last Tuesday, Green Caterpiiar Garden Supplies Inc. lost a portion of its planning and financial data whan both its main and its backup servers crashed. The company's CFO remembers that the intenal rate of return (IRR) of Project Zeta is 11.3%, but he can't recall how much Green Caterpaar originally invested in the project nor the project's net present value INPV), towever, he found a note that detaled the annual nat cash fnoms espected to be gesereted by Project Zeta. They are: er1 $2,400,000 Year 2 $4,500,00 Year 3 $4,500,000 Year4 $4,500,000 The cro has asked you to campute Project Zeta's intial investment using the information currently available to you. He has offered the folowing suggestions and observations project's IRR represents the return the prepect would generate when es NPV is zero or the discounted value of its cash inflows equals the discounted value of its cash outflows-when the cash fiows are discounted using the project's IRR · The level of risk exhibited by Project Zeta is the same as that exhibited by the company's average preject, which means that Project Zeta's net cesh Hlows can be dscounted using Green Catrpllar's 8% wACC. Given the data and hints, Project Zeta's initial investment is Crounded to the nearest whole dollar) , and ts NPV is A project's IRRil decrease the project's cash inflows increase, and everything ese is unaffected. OSTELLExplanation / Answer
Year Cash flow PVF at 11.3% Present Value 1 $ 2,400,000 0.8985 $ 2,156,334 2 $ 4,500,000 0.8073 $ 3,632,639 3 $ 4,500,000 0.7253 $ 3,263,826 4 $ 4,500,000 0.6517 $ 2,932,458 Total Present Value $ 11,985,257 Since at IRR NPV becomes zero, i.e. Presnt value of cash flows represent Initial Investment. So initial Investment is $11,985,257 Year Cash flow PVF at 8% Present Value 0 $ (11,985,257) 1 $ (11,985,257.00) 1 $ 2,400,000 0.9259 $ 2,222,222.22 2 $ 4,500,000 0.8573 $ 3,858,024.69 3 $ 4,500,000 0.7938 $ 3,572,245.08 4 $ 4,500,000 0.7350 $ 3,307,634.34 NPV = Sum total $ 974,869 Initial Investment $11,985,257 NPV $974,869 A project's IRR will Increase if the project's cash inflows increase, and everything else is unaffected.
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