Please help by showing the steps to finding this answer... A project has an init

Question

Please help by showing the steps to finding this answer...

A project has an initial cost of $40,000, expected net cash inflow of $9,000 per year for 7 years, and a cost of capital of 11%. What is the project's NPV? (hint: Begin by constructing a time line.)

What is the project's IRR?

A project has an initial cost of $40,000, expected net cash inflow of $9,000 per year for 7 years, and a cost of capital of 11%. What is the project's NPV? (hint: Begin by constructing a time line.)

What is the project's IRR?

Explanation / Answer

itial cost $40,000.00 Year Cash inflows Present value factor @ 11% Present value 1 $9,000 0.9009 $8,108.11 2 $9,000 0.8116 $7,304.60 3 $9,000 0.7312 $6,580.72 4 $9,000 0.6587 $5,928.58 5 $9,000 0.5935 $5,341.06 6 $9,000 0.5346 $4,811.77 7 $9,000 0.4817 $4,334.93 Total $42,409.77 NPV Present value of cash inflows -Present value of cash outflows NPV 42,409.77-40,000 NPV $2,409.77

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