HW 2 FV PV IRR (1) -Excel Sign in HOME INSERT PAGE LAYOUT FORMULAS DATAREVIEW VI

ID: 2813769 • Letter: H

Question

HW 2 FV PV IRR (1) -Excel Sign in HOME INSERT PAGE LAYOUT FORMULAS DATAREVIEW VIEW Foxit PDF AutoSum A Fill Wrap Text Currency 10A A o Conditional Format a Cell tting Table Styles Sort &Find & Filter Select Insert Delete Format , Clear. € 4 Merge & Certer. Nignment $, % , B IU A.- Edting Clipboard B9 496 4 r, intrest rate Payment -3,000 150 Year 1. You invest $3,000 in a project. You expect a cash flow of $150 for the first year, with net revenues to grow at 4% per year through year 15, Calculate the cash flows through year 15 2. Format the cells to be currency with 2 decimal places. 3. Calculate the IRR of this project. Would you take it? Why or why not? WRITE YOUR EXPLANATION HERE: 10 12 13 14 15 16 17 18 19 20 6 10 12 13 14 15 23 24 IRR 25 Instructions Problem 1 Problem 2 Problem 3 115% EDII 4:28 PM la 9/9/2018 1 O Type here to search

Explanation / Answer

Year

Payment

-3,000.00

150.00

156.00

162.24

168.73

175.48

182.50

189.80

197.39

205.29

213.50

222.04

230.92

240.15

249.76

259.75

IRR = 0.0135%

Use IRR function in “C24” cell:

= IRR(C7:C22)

=0.0135%

IRR seems to be very low, this project would not be desirable on merit of given cash inflows. Project is likely to be rejected if the expected rate of return is more than 0.0135%