A project has annual cash flows of $3,500 for the next 10 years and then $7,000
ID: 2776251 • Letter: A
Question
A project has annual cash flows of $3,500 for the next 10 years and then $7,000 each year for the following 10 years. The IRR of this 20-year project is 11.59%. If the firm's WACC is 9%, what is the project's NPV? Round your answer to the nearest cent. A project has annual cash flows of $3,500 for the next 10 years and then $7,000 each year for the following 10 years. The IRR of this 20-year project is 11.59%. If the firm's WACC is 9%, what is the project's NPV? Round your answer to the nearest cent.Explanation / Answer
AT IRR PV of Cash Outflows = PV of Cash Inflows Statemnet showing Cash flows Particulars Time PVf@11.59% Amount PV Cash inflows 1.00 0.8961 3,500.00 3,136.48 Cash inflows 2.00 0.8031 3,500.00 2,810.72 Cash inflows 3.00 0.7197 3,500.00 2,518.79 Cash inflows 4.00 0.6449 3,500.00 2,257.18 Cash inflows 5.00 0.5779 3,500.00 2,022.75 Cash inflows 6.00 0.5179 3,500.00 1,812.66 Cash inflows 7.00 0.4641 3,500.00 1,624.39 Cash inflows 8.00 0.4159 3,500.00 1,455.68 Cash inflows 9.00 0.3727 3,500.00 1,304.49 Cash inflows 10.00 0.3340 3,500.00 1,169.00 Cash inflows 11.00 0.2993 7,000.00 2,095.17 Cash inflows 12.00 0.2682 7,000.00 1,877.56 Cash inflows 13.00 0.2404 7,000.00 1,682.56 Cash inflows 14.00 0.2154 7,000.00 1,507.80 Cash inflows 15.00 0.1930 7,000.00 1,351.20 Cash inflows 16.00 0.1730 7,000.00 1,210.86 Cash inflows 17.00 0.1550 7,000.00 1,085.10 Cash inflows 18.00 0.1389 7,000.00 972.40 Cash inflows 19.00 0.1245 7,000.00 871.40 Cash inflows 20.00 0.1116 7,000.00 780.89 PV of Cash Inflows 33,547.09 PV of Cash Outflows = 33547.09 Statemnet showing Cash flows Particulars Time PVf@9% Amount PV Cash Outflows - 1.00 (33,547.09) (33,547.09) PV of Cash outflows (33,547.09) Cash inflows 1.00 0.9174 3,500.00 3,211.01 Cash inflows 2.00 0.8417 3,500.00 2,945.88 Cash inflows 3.00 0.7722 3,500.00 2,702.64 Cash inflows 4.00 0.7084 3,500.00 2,479.49 Cash inflows 5.00 0.6499 3,500.00 2,274.76 Cash inflows 6.00 0.5963 3,500.00 2,086.94 Cash inflows 7.00 0.5470 3,500.00 1,914.62 Cash inflows 8.00 0.5019 3,500.00 1,756.53 Cash inflows 9.00 0.4604 3,500.00 1,611.50 Cash inflows 10.00 0.4224 3,500.00 1,478.44 Cash inflows 11.00 0.3875 7,000.00 2,712.73 Cash inflows 12.00 0.3555 7,000.00 2,488.74 Cash inflows 13.00 0.3262 7,000.00 2,283.25 Cash inflows 14.00 0.2992 7,000.00 2,094.73 Cash inflows 15.00 0.2745 7,000.00 1,921.77 Cash inflows 16.00 0.2519 7,000.00 1,763.09 Cash inflows 17.00 0.2311 7,000.00 1,617.51 Cash inflows 18.00 0.2120 7,000.00 1,483.96 Cash inflows 19.00 0.1945 7,000.00 1,361.43 Cash inflows 20.00 0.1784 7,000.00 1,249.02 PV of Cash Inflows 41,438.02 NPV 7,890.93
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