You are evaluating a proposed project for your company. The project is expected

Question

You are evaluating a proposed project for your company. The project is expected to generate the following end-of-year cash flows: 4 8 $3,000 300 $500 $600 $600 $800 $800 800 $400 You have been told you should evaluate this project with an interest rate of 9%, what is the project's NPV? O $101.62 O $235.97 O $219.77 O $201.99 O $51.43 Your group leader has now told you that the risk of the project was understated before. As a result, she tells you to recalculate the project's NPV with an 11% interest rate, what is the new NPV? O -$28.59 O -$104.13 O -$66.36 O-$60.74 O-$71.99 when the project was first evaluated at 996, you would have advised that the company accept the project because it added value for the company. But now with an 11% interest rate, you will advise the company to value for the company reject the project because it loses Calculate the project's internal rate of return (IRR) 9.99% 10.76% 12.45% 15.08% 9.41%

Explanation / Answer

The NPV at 9%, 11% and IRR are calculated below using excel function =NPV(rate, values) and =IRR(values) as shown below:

NPV at 9% = $219.77 (Option C)

NPV at 11% = -$28.59 (Option A)

Fill in the blanks are correct

IRR = 10.76% (Option B)

Year Cash flow 0 -3000 1 300 2 500 3 600 4 600 5 800 6 800 7 800 8 400 NPV at 9% $ 219.77 NPV at 11% $   -28.59 IRR 10.76%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.