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A project costs $5,000 at t = 0 and will generate annual cash flows of $750...

  1. A project costs $5,000 at t = 0 and will generate annual cash flows of $750 for 10 years, starting at t = 1. The discount rate is 6%.

    1. What is the NPV?

    2. What is the IRR? (Write down the equation for the IRR and get the solution using

      Excel or the calculator.)

    3. A project costs $5,000 and will generate annual cash flows of $200 in the first year, $300 in the second year and $400 in the third year. The cash flow is then expected to grow at 3% every year forever. The discount rate is 12%.

      1. What is the NPV?

      2. Write down the equation for the IRR. Then find the IRR using Goal Seek i

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