eztomheducationcom Ch 8 NPVv You are serving on a jury A pla

ezto.mheducation.com Ch 8. NPVv You are serving on a jury. A plaintiff is suing the cit.. A project has the following cash flows: Year Cash Flow $ 67,500 -43,000 -32,000 What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return 7.72 % What is the NPV of this project if the required return is 4 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present value S What is the NPV of the project if the required return is 0 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present value What is the NPV of the project if the required return is 23 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present value $ References eBook & Resources 24

Solution

Answer)

Here it is considered that the student need no help with IRR.

NPV if required rate is 4%:

($43000×1/1.04)+($43000×1/1.04^2)-$67500

=$3432.95

NPV if required return is 0%:

$43000+$32000-$67500

=$7500

NPV if required rate is 23%:

($43000×1/1.23)+($32000×1/1.23)-$67500

= -$11389.23