What is the IRR for this project? ( Do not round intermediate calculations. Ente

Question

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

What is the NPV of this project if the required return is 5 percent? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. 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. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

What is the NPV of the project if the required return is 23 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g.,32.16).)

A project has the following cash flows:

Explanation / Answer

1.

Step: 3 Computation of IRR

Formula =L1+NPV1/(NPV1-NPV2)*(L2-L1)

Here, L1 =Discount rate 5%, L2 =Discount rate 8%,NPV1 = NPV at 5%, NPV2 =NPV at 8%

IRR =5%+2119.05/(2119.05-(-582.30)*(8%-5%)

IRR =7.35%

2.NPV if Discount rate if 5%

3.NPV of the project if the required return is 0 percent

4.NPV of the project if the required return is 23 percent

Step 1: Compute NPV at 5% Year Cash flows PVF@5% PV 0 -65500 1 (65,500.00) 1 39000 0.952381     37,142.86 2 33600 0.907029     30,476.19 NPV1        2,119.05 Step 2: Compute NPV at 8% Year Cash flows PVF@15% PV 0 -65500 1 (65,500.00) 1 39000 0.925926     36,111.11 2 33600 0.857339     28,806.58 NPV2         (582.30)

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