Question

An investment cost $10,000 with expected cash flows of
$3,000 a year for 5 years. At what discount rate will the project’s
IRR equal its discount rate?

27.22%

15.24%

0%

16.67%

21.08%

Answer #1

Ans ) **2nd option -
15.24%**

Assume a project will cost $10,000. Expected Cash Flows to be
received are $2,000 per year at end of years 1 & 2, then $4,000
per year at end of years 3 & 4 and $5,000 at the end of year 5.
No cash flows beyond year 5. Discount rate is 10%.
What is the NPV (value created)?

Problem 1
1.Startup cost: $10,000.
The cash flows for Years 1 through 5 are estimated to be $2500,
$4000, $5000, $3000, $1000.
Discount rate = 6%.
PV = C/(1+r)^t
NPV = Add all PVs and subtract investment
Problem 2
2. Startup costs in Year 0: $70,000.
The cash flows for Years 1 through 4 are estimated to be
$40,000
Discount rate = 12%.
Show Present Value for each year
Show Net Present Value after 4 years
as of today
Problem...

Given an initial investment of $10,000, a hurdle rate of 11% and
the following cash flows, find the IRR: Year 1
$2,500 Year 2
$2,500 Year 3 $3,000 Year
4 $3,000 Year 5
$3,500
Based on the IRR in question 8, is it worth the $10,000
investment? Why or why not?

An investment is expected to produce annual cash flows $8,000
every year for 5 years. Assuming a discount rate of 8%, the present
value of this series of cash flows is _____. (Round your answer to
two decimal places.)
Period
1
2
3
4
5
8%
0.92593
0.85734
0.79383
0.73503
0.68058
a.$31,941.68
b.$39,852.23
c.$32,857.53
d.$29,866.67

An investment project has the following cash flows: initial cost
= $1,000,000; cash inflows = $200,000 per year for eight years. If
the required rate of return is 12%: i) Compute the project’s NPV.
What decision should be made using NPV? ii) Compute the project’s
IRR. How would the IRR decision rule be used for this project, and
what decision would be reached?

Project S has a cost of $10,000 and is expected to produce
benefits (cash flows) of $3,000 per year for 5 years. Project L
costs $25,000 and is expected to produce cash flows of $7,400 per
year for 5 years. Calculate the two projects' NPVs (in dollars),
assuming the cost of capital of 10%. (Round your answers to the
nearest cent.)
S$
L$
Calculate the two projects' IRRs (as percents), assuming the
cost of capital of 10%. (Round your answers...

If an investment project is described by the sequence of cash
flows:
Year
Cash flow
0
-300
1
-900
2
1100
3
500
Calculate the MIRR, we will assume a finance rate of 8% and a
reinvestment rate of 10% [5]
Find the IRR (using 7%, 10%, 11%) of an investment having
initial cash outflow of $3,000. The cash inflows during the first,
second, third and fourth years are expected to be $700, $800, $900
and $1,200 respectively
[5]...

Project A cost $67,775 its expected net cash inflows are $10,000
per year for 10 years and its WACC is 8%
what is its IRR

This question is based on the following cash flows
C0=$10,000
I1=$2,000
I2=$2,000
I3=$3,000
I4=$3,000
I5=$2,500
L=$1,000
0
1
2
3
4
5
C: Cost, I: Income, L: Salvage
The escalation rate is 10% per year in this example.
Calculate the NPV of this investment assuming an escalated
dollar minimum rate of return of 8%

This question is based on the following cash flows
C0=$10,000
I1=$2,000
I2=$2,000
I3=$3,000
I4=$3,000
I5=$2,500
L=$1,000
0
1
2
3
4
5
C: Cost, I: Income, L: Salvage
The escalation rate is 10% per year in this example.
Calculate the NPV of this investment assuming an escalated
dollar minimum rate of return of 8%

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