Question

A project has annual cash flows of $7,000 for the next 10 years and then $9,000 each year for the following 10 years. The IRR of this 20-year project is 11.35%. If the firm's WACC is 10%, what is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

Answer 1

-Initial Investment+7000/1.1135+7000/1.1135^2+7000/1.1135^3+7000/1.1135^4+7000/1.1135^5+7000/1.1135^6+7000/1.1135^7+7000/1.1135^8+7000/1.1135^9+7000/1.1135^10+9000/1.1135^11+9000/1.1135^12+9000/1.1135^13+9000/1.1135^14+9000/1.1135^15+9000/1.1135^16+9000/1.1135^17+9000/1.1135^18+9000/1.1135^19+9000/1.1135^20=0

=>Inital Investment=58452.45943

NPV of the project=-58452.45943+7000/1.1+7000/1.1^2+7000/1.1^3+7000/1.1^4+7000/1.1^5+7000/1.1^6+7000/1.1^7+7000/1.1^8+7000/1.1^9+7000/1.1^10+9000/1.1^11+9000/1.1^12+9000/1.1^13+9000/1.1^14+9000/1.1^15+9000/1.1^16+9000/1.1^17+9000/1.1^18+9000/1.1^19+9000/1.1^20=$5880.48