lia i FINS10Summer Il2018 Aaron PlanttI Customer Support I S

lia i FINS10,Summer Il,2018 Aaron PlanttI Customer Support I Sign Out Home Grades Personalized Reviews Discussion Course Materials inal Exam-Chapters 7-11,14,16 IBack to Assignment Deadline Today at 09.00 PM Attempts 11-2: Net Present Value (WV) 11-3: Internal Rate or Return (IRR) project has annual cash nows of $3,500 for the next 10 years and then $8,500 each year for the following 10 years 10years. The IRR of this 20-year prepect os 11.04%. Ifthe firm\'s WACC as 10%, what is the poject\'s see Rend your to the nearest cent Copyright Notices Terms of Use Prvacy Notice Security NaticeAccessiblity

Solution

NPV = Sum of PV of Cash Inflows - Sum of PV of Cash Outflows

= $3,500/1.10¹ + $3,500/1.10² + $3,500/1.10³ + $3,500/1.10⁴ + $3,500/1.10⁵ + $3,500/1.10⁶ + $3,500/1.10⁷ + $3,500/1.10⁸ + $3,500/1.10⁹ + $3,500/1.10¹⁰ + $8,500/1.10¹¹ + $8,500/1.10¹² + $8,500/1.10¹³ + $8,500/1.10¹⁴ + $8,500/1.10¹⁵ + $8,500/1.10¹⁶ + $8,500/1.10¹⁷ + $8,500/1.10¹⁸ + $8,500/1.10¹⁹ + $8,500/1.10²⁰

= $3,181.82 + $2,892.56 + $2,629.60 + $2,390.55 + $2,173.22 + $1,975.59 + $1,796.05 + $1,632.78 + $1,484.34 + $1,349.40 + $2,979.20 + $2,708.36 + $2,462.15 + $2,238.32 + $2,034.83 + $1,849.85 + $1,681.68 + $1,528.80 + $1,389.82 + $1,263.47

= $41,642.46