Question

a. Tindall Industries has the opportunity to develop a new plant based hotdog, it estimates that the project’s cost of capital is 10%. The project’s expected cash flows (in $ millions) at the end of year are given below. What is the NPV of this project? Enter your answer in $ millions without the “$”; round your final answer to two decimals.

Timeline	0	1	2	3	4	5	6	7
CF	-3,000	200	250	300	450	700	1,000	1,000

b.

Given the following end of year cash flows (CF), what is the net-present value (NPV) of this investment opportunity. Assume that the project’s cost of capital is 10%. Round your final answer to two decimals.

Timeline	0	1	2	3	4
CF	-1000	300	400	500	700

c.

Given the following end of year cash flows (CF), what is the Internal Rate of Return (IRR) of this investment opportunity. Enter your answer as a percent; do not include the % sign. Round your final answer to two decimals.

Timeline	0	1	2	3	4
CF	-1000	300	400	500	700

Answer 1

a. Use NPV function in EXCEL to find the NPV

=NPV(rate,Year1 to Year7cashflows)-Year0 cashflow

=NPV(10%,Year1 to Year7cashflows)-3000=-$566.54

cost of capital	10%
Year0	-3000
Year1	200
Year2	250
Year3	300
Year4	450
Year5	700
Year6	1000
Year7	1000
NPV	-566.54

b&c. Use same formula to find the NPV

=NPV(10%,Year1 to Year4cashflows)-1000=$457.07

Use IRR function in EXCEL to find IRR

=IRR(Year0 to Year4 cashflows)=26.87%

cost of capital	10%
Year0	-1000
Year1	300
Year2	400
Year3	500
Year4	700
NPV	457.07
IRR	26.87%