Question

# . Calculate the IRR and NPV for the following cash flows. Assume a 15% discount rate...

. Calculate the IRR and NPV for the following cash flows. Assume a 15% discount rate

 Year Project 1 Cash flow Project 2 Cash flow 0 -\$20,000 -\$20,000 1 1,000 12,000 2 3,000 15,000 3 4,000 3,000 4 12,000 4,000 5 15,000 1,000

9. If your tenant pays you rent of \$24,000 a year for 10 years, what is the present value of the series of payments discounted at 10% annually?

10. You are going to invest \$300,000 in a real estate investment project that generates the following cash flows.

 Year 1 2 3 4 5 Cash flow 100,000 100,000 100,000 100,000 100,000

Assuming an 11% discount rate, what is the NPV of this project? What is the IRR?

1st question:

I have answered this question in Excel as follows:

Note:

1. For DF @ 15% we have used power function where df=power(1/1.15,years)
2. NPV is sum of PV of cash flows.
3. IRR has been calculated using IRR function.

9. Present Value of series of payments=24,000*PVAF(10%,10)

=24,000*6.1446

=\$1,47,470.4

10. This question I have answered in Excel as follows:

Note:

1. For DF @ 11% we have used power function where df=power(1/1.11,years)
2. NPV is sum of PV of cash flows.
3. IRR has been calculated using IRR function.

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