A project has the following cash flows: Year 0 Cash Flow= $58,000 Year 1 Cash Fl

Question

A project has the following cash flows: Year 0 Cash Flow= $58,000 Year 1 Cash Flow= -$34,000 Year 2 Cash Flow= -$45,000 A. What is the IRR for this project?B. If the required return is 12 percent, should the firm accept the project?C.What is the NPV of the project if the required return is 0%?24%? D. What is going on here? I need a solution to the problem.

Explanation / Answer

A.for IRR, NPV=0 58000 -34000/(1+r) + -$45,000/(1+r)^2 = 0 r= 22.14% IRR =22.14% IRR>12% B.The firm should not accept the project c)NPV = 58000 -34000/(1+24%) + -$45,000/(1+24%)^2 NPV = 1314.26 D) According to NPV, firm should not accept the project

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