FREE Trial

Calculate the NPV and IRR of the following project and check whether they produce the same decision.

Question:

Calculate the NPV and IRR of the following project and check whether they produce the same decision. After-tax initial investment is $66,777; after-tax cash flows at each of the following six year ends are $20,000. The year-end cash flow at year 7 is $40,000. Assume k is 18 percent.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 75% (12 reviews)

Using a financial calculator TI BA II Plus CF2ndCLR WORK 66777 Enter 20000 En...View the full answer


answer-question-section
Answered By
tutor-profile-image
Abigael martinez
I have been a tutor for over 3 years and have had the opportunity to work with students of all ages and backgrounds. I have a strong belief that all students have the ability to learn and succeed if given the right tools and support. I am patient and adaptable, and I take the time to get to know each student's individual learning style in order to best support their needs. I am confident in my ability to help students improve their grades and reach their academic goals.
5.00+ 1+ Reviews 10+ Question Solved
Related Book For  book-img-for-question
Introduction To Corporate Finance

Introduction To Corporate Finance

ISBN: 9781118300763

3rd Edition

Authors: Laurence Booth, Sean Cleary

See More Books
Question Posted:
See More Questions

Related Video

NPV stands for \"Net Present Value,\" which is a financial concept used to determine the value of an investment or project. It measures the difference between the present value of cash inflows and the present value of cash outflows over a given period of time, using a specific discount rate. To calculate the NPV of an investment, you need to first estimate the cash inflows and outflows associated with the investment, and then discount them back to their present values using a discount rate. The discount rate represents the cost of capital or the expected rate of return required by investors. The formula for calculating NPV is: NPV = sum of (cash inflows / (1 + discount rate)^t) - sum of (cash outflows / (1 + discount rate)^t) Where: Cash inflows: the expected cash received from the investment Cash outflows: the expected cash paid out for the investment Discount rate: the required rate of return or the cost of capital t: the time period in which the cash flow occurs If the NPV is positive, it means that the investment is expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a good investment. If the NPV is negative, it means that the investment is not expected to generate a return higher than the required rate of return or the cost of capital, and it may be considered a bad investment.

Students also viewed these Accounting questions

The Crown And The Collar - ISBN: B0CR1ZPC26 - Free Book