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East Coast Television is considering a project with an initial outlay of​ $X (you will have...

East Coast Television is considering a project with an initial outlay of​ $X (you will have to determine this​ amount). It is expected that the project will produce a positive cash flow of $55,000 a year at the end of each year for the next 14 years. The appropriate discount rate for this project is 11 percent. If the project has an internal rate of return of 14 ​percent, what is the​ project's net present​ value?

1. If the project has an internal rate of return of 14​%, then the​ project's initial outlay is $:

2. If the discount rate is 11%, then the NPV is $:

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Answer #1

If we calculate NPV or present value of all cash inflows at IRR, then the answer will be equal to initial outflow, as the IRR = PV of cash inflows = Cash outflow

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