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-   -   Net Present Value and IRR (https://www.askmehelpdesk.com/showthread.php?t=350919)

  • May 7, 2009, 10:35 AM
    teddyola
    Net Present Value and IRR
    Period 0 1 2 3 4 5 6 7
    Project
    A Investment $(65,000)
    Cash Flows $15,000 $19,000 $14,000 $25,000 $10,000 $9,000 $15,000

    B Investment $(1,000)
    Cash Flows $90 $275 $650 $500 $250 $300 $50

    C Investment $(10,000)
    Cash Flows $5,000 $5,000 $(3,000) $5,000 $5,000 $(3,000) $5,000

    Point Value
    1 4 For "A" above, calculate the Net Present Value using a 15% discount rate.

    2 4 For "B" above, calculate the Net Present Value using a 12% discount rate.

    3 4 For "A" above, calculate the Internal Rate of Return.

    4 4 For "c" above, calculate the Internal Rate of Return.
  • May 7, 2009, 05:02 PM
    morgaine300

    Please see the guidelines for posting homework (test/quiz? ) problems:
    Ask Me Help Desk - Announcements in Forum : Homework Help
  • May 7, 2009, 10:35 PM
    sharona10

    Period
    0 $(65,000)
    1 $15,000
    $19,000 $14,000 $25,000 $10,000 $9,000 $15,000
    2
    3
    4
    5
    6
    7




    Cash Flows
  • May 7, 2009, 10:51 PM
    sharona10

    Period key factor( discounting rate) NPV (cash flows x this. Rate)
    0 $(65,000) 1 (65000)
    1 $15,000 0.869 13035
    2 $19,000 0.756 14364
    3 $14,000 0.657 9198
    4 $25,000 0.571 14275
    5 $10,000 0.497 4970
    6 $9,000 0.432 3888
    7 $15,000 0.375 5625

    total npv= $355.


    for the discount rate, instead of learning it by heart, you can calculate it by:
    as it is mentioned that the rate is 15%,
    you calculate it by: ( on your calculator you insert)

    15%= 0.15
    1+answer= 1.15
    answer divide by 1.15=1
    you just have to click on equal to, you will have the rate. (see above)





    Think tha calcualtion of NPV is clear.

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