Homework SourseA project costs 600000 today and will produce a single oneti
A project costs $600,000 today, and will produce a single, one-time after tax cash flow of $1,500,000 in the future. What is the IRR of this project under each of the following scenarios?
a. The future cash flow occurs in 5 years.
b. The future cash flow occurs in 10 years.
c. The future cash flow occurs in 15 years.
d. The future cash flow occurs in 20 years.
Solution
Please refer each case in below table:
Using financial calculator BA II Plus - Input details:
5 Years
10 Years
15 Years
20 Years
FV = Future Value =
$1,500,000.00
$1,500,000.00
$1,500,000.00
$1,500,000.00
PV = Present Value =
-$600,000.00
-$600,000.00
-$600,000.00
-$600,000.00
N = Total number of periods = Number of years =
5
10
15
20
PMT = Payment =
$0.00
$0.00
$0.00
$0.00
CPT > I/Y = Rate = IRR =
20.1124
9.5958
6.2990
4.6880
Rate or IRR in % form = IRR / 100 =
20.11%
9.60%
6.30%
4.69%
| Using financial calculator BA II Plus - Input details: | 5 Years | 10 Years | 15 Years | 20 Years |
| FV = Future Value = | $1,500,000.00 | $1,500,000.00 | $1,500,000.00 | $1,500,000.00 |
| PV = Present Value = | -$600,000.00 | -$600,000.00 | -$600,000.00 | -$600,000.00 |
| N = Total number of periods = Number of years = | 5 | 10 | 15 | 20 |
| PMT = Payment = | $0.00 | $0.00 | $0.00 | $0.00 |
| CPT > I/Y = Rate = IRR = | 20.1124 | 9.5958 | 6.2990 | 4.6880 |
| Rate or IRR in % form = IRR / 100 = | 20.11% | 9.60% | 6.30% | 4.69% |
