What is the IRR for this project? (Do not round intermediate calculations. Enter
ID: 2728842 • Letter: W
Question
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.)
What is the NPV of this project, if the required return is 10 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.)
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.)
What is the NPV of the project if the required return is 20 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A project has the following cash flows:
Explanation / Answer
Note: Assuming Year zero cash flow is Negative. If cash flow is positive, the answer would be different.
1) What is the IRR for this project?
Internal rate of return (IRR) is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
We have to find IRR by assuming different discount rate by Trial and error method
Suppose discount rate is 12.343%
Year
Cash flow
PVF@12.343%
Present value
0
-39000
1
-39000.00
1
18000
0.890131116
16022.36
2
29000
0.792333404
22977.67
Total
0.00
2) What is the NPV of this project, if the required return is 10 percent?
Year
Cash flow
PVF@10%
Present value
0
-39000
1
-39000.00
1
18000
0.909090909
16363.64
2
29000
0.826446281
23966.94
Total
1330.58
3)What is the NPV of the project if the required return is 0 percent?
Year
Cash flow
PVF@0%
Present value
0
-39000
1
-39000.00
1
18000
1
18000.00
2
29000
1
29000.00
Total
8000.00
4)What is the NPV of the project if the required return is 20 percent?
Year
Cash flow
PVF@20%
Present value
0
-39000
1
-39000.00
1
18000
0.833333333
15000.00
2
29000
0.694444444
20138.89
Total
-3861.11
Year
Cash flow
PVF@12.343%
Present value
0
-39000
1
-39000.00
1
18000
0.890131116
16022.36
2
29000
0.792333404
22977.67
Total
0.00
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