A project has the following cash flows: What is the IRR for this project? ( Do n
ID: 2715617 • Letter: A
Question
A project has the following cash flows:
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 4 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 22 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g.,32.16).)
Year Cash Flow 0 $ 68,000 1 – 44,000 2 – 31,600Explanation / Answer
Requirement 1
AT IRR, NPV = 0
0 = 68000 - 44000/(1+r) -31600/(1+r)^2
By solving above equation we get
IRR = 7.81%
Requirement 2
Net present value = 68000 - 44000/(1+4%) -31600/(1+4%)^2
Net present value = -3523.67
Requirement 3
Net present value = 68000 - 44000 -31600
Net present value = -7600
Requirement 4
Net present value = 68000 - 44000/(1+22%) -31600/(1+22%)^2
Net present value = $ 10703.57
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